<PAGE>
HSBC Funds Trust
- --------------------------------------------------------------------------------
Money Markets
- --------------------------------------------------------------------------------
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
------------------------------------------------------------------
January 31, 2000
Dear Shareholder:
On November 16th, the Federal Reserve Open Market Committee raised short-term
interest rates 25 basis points to a 5.50% target. This when coupled with their
25 basis point hikes of 6/30/99 and 8/24/99 effectively reversed their 75 basis
point easing of 1998 caused by the global credit crisis. The Federal Reserve's
statement after the latest increase cited that its main objective was to
diminish the risk of inflation in the near future and that cost pressures
appeared generally contained. However, they did warn that risks to sustainable
growth persist and that business was expanding in excess of the economy's
growth potential.
On the economic front, all is well as Consumer Confidence reached its highest
level in over 30 years. Unemployment fell to a 4.1% level, holiday spending was
brisk added by record purchases over the internet, consumer spending remained
solid and the Gross National Product (GNP) continued to grow at higher than
anticipated levels. However, inflation continues to be watched as the tighter
than a drum labor market, the price of commodities (especially oil) and
Consumer Price Index/Producer Price Index numbers will very likely be closely
analyzed by the Federal Reserve.
As the year drew to a close there were concerns over the ramifications of Y2K.
The markets questioned whether or not there would be a massive flight to
quality causing U.S. Treasuries to rally sharply and whether there would be
sufficient liquidity for the markets to trade efficiently. But the Federal
Reserve's issuance of multi-billion dollar U.S. Treasury Cash Management Bills
and repurchase agreements sufficiently eased the market's concerns.
As in the past, our primary objective is to ensure that the HSBC Money Market
Funds reflect the highest standards characterized by stability, safety,
performance and service. HSBC Asset Management values this relationship and we
appreciate the opportunity 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 Former Managing Director, HSBC Asset Management
Americas Inc.
CLIFTON H.W. MALONEY President, C.H.W. Maloney & Co. Incorporated
JOHN C. MEDITZ President, Horizon Asset Management, Inc.
HARALD PAUMGARTEN Managing Director, Heritage Capital Corp.
JOHN P. PFANN Former Senior Vice President and Treasurer, ITT
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 December 31, 1999
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- --------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
COMMERCIAL PAPER (31.0%)
Banking and Financial
Services (31.0%)
N/R, N/R Banco Barclay Bahamas
(LOC - Barclay)........ 5.43% 1/20/00 $10,000,000 $ 9,971,342
N/R, N/R Banco Barclay Bahamas
(LOC - Barclays Bank).. 6.15 1/31/00 10,000,000 9,948,750
P-1, A-1+ Banco Itau SA (LOC -
Bayerische
Vereinsbank)........... 5.33 3/2/00 5,000,000 4,954,843
N/R, N/R Credit Suisse First
Boston................. 5.61 2/14/00 11,100,000 11,023,891
N/R, N/R Credit Suisse First
Boston................. 5.71 2/3/00 6,000,000 5,968,595
N/R, N/R Dollar Thrifty.......... 6.20 1/26/00 10,158,000 10,114,264
N/R, N/R General Electric Capital
Company................ 6.01 2/3/00 5,850,000 5,817,771
N/R, N/R General Motors
Acceptance Corp........ 5.97 1/27/00 5,000,000 4,978,442
N/R, N/R Glencore Asset (LOC -
Societe Generale)..... 6.33 1/18/00 15,000,000 14,955,163
P1, A-1+ Peacock Funding,
(Guarantor - General
Electric Co)........... 6.07 1/31/00 4,597,000 4,573,747
N/R, N/R Peacock Funding,
(Guarantor - General
Electric Co)........... 5.83 2/3/00 7,620,000 7,579,277
N/R, N/R Sigma Finance Inc....... 6.06 1/21/00 5,500,000 5,481,483
P-1, A-1+ Sigma Finance Inc....... 5.73 2/22/00 15,000,000 14,875,850
N/R, N/R Yamaha Motor Finance
(LOC - Chase Bank)..... 6.00 2/10/00 10,000,000 9,933,333
------------
Total Commercial Paper (Cost - $120,176,751)....... 120,176,751
------------
MEDIUM TERM NOTES
(51.6%)
Automotive Parts -
Replacement (3.1%)
A-1, A Ford Motor Credit Co,*.. 5.74 2/18/00 12,000,000 11,997,273
------------
Banking and Financial
Services (48.5%)
P-1, A-1 American Express
Centurion Bank*........ 5.70 2/8/00 18,000,000 18,000,000
P-1, A-1+ Associates Corp.*....... 6.34 1/20/00 18,000,000 17,997,310
A-2, A Bear, Stearns & Co.*.... 5.75 1/24/00 7,000,000 7,000,000
A-2, A Bear, Stearns & Co.*.... 5.76 3/15/00 11,000,000 11,000,000
P-1, A-1+ Canadian Imperial Bank
of Commerce*........... 5.63 4/13/00 19,100,000 19,096,238
P-1, A-1+ Deutsche Bank New
York*.................. 5.63 1/26/00 16,300,000 16,296,900
N/R, N/R Dresdner Bank NY*....... 6.44 1/24/00 16,100,000 16,096,485
P-1, A-1 General Motors
Acceptance Corp.*...... 5.77 3/10/00 15,000,000 15,000,591
P-1, A-1+ Goldman Sachs Group*.... 5.15 1/3/00 15,000,000 14,998,150
Aa-2, AA Harris Trust &
Savings*............... 5.85 2/10/00 14,500,000 14,498,241
</TABLE>
3
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999 (continued)
CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- --------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
MEDIUM TERM NOTES
(continued)
Banking and Financial
Services (continued)
P-1, A-1 John Deere Capital
Corp.*................. 5.65% 3/16/00 $19,000,000 $ 18,999,221
P-1, A-1+ Royal Bank of Canada*... 5.63 1/13/00 19,100,000 19,096,238
------------
188,079,374
------------
Total Medium Term Notes
(Cost - $200,076,647)............................. 200,076,647
------------
YANKEE CERTIFICATES OF DEPOSIT (11.5%)
Banking and Financial
Services (11.5%)
P-1, A-1+ ABN Amro Bank NV........ 5.23 3/10/00 10,000,000 9,999,517
P-1, A-1+ Bayerische Hypotheken
Vereinsbank............ 5.08 2/10/00 10,000,000 9,997,353
P-1, A-1+ Commerzbank AG.......... 5.07 2/9/00 17,800,000 17,798,952
P-1, A-1 Svenska Handelsbanken... 5.28 3/3/00 6,900,000 6,899,098
------------
Total Yankee Certificates of Deposit
(Cost - $44,694,920).............................. 44,694,920
------------
CERTIFICATES OF DEPOSIT
(5.9%)
Banking and Financial
Services (5.9%)
P-1, A-1+ Bankers Trust Co........ 5.50 3/10/00 15,000,000 15,000,000
P-1, A-1+ Chase Manhattan Bank.... 5.37 5/22/00 8,000,000 7,998,206
------------
Total Certificates of Deposit
(Cost - $22,998,206).............................. 22,998,206
------------
TOTAL (Cost - $387,946,524) (a)--100.0%............ $387,946,524
============
</TABLE>
- --------
Percentages indicated are based on market value of investments of $387,946,524.
(a) Cost and value for Federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate represents rate in effect at December 31,
1999. Date presented represents the next rate change date.
AG - Aktiengesellschaft (German stock company)
LOC - Letter of Credit
N/R - Not Rated. The security, as judged by the portfolio manager, is
comparable to the quality of investments in which the fund may invest.
NV -- Naamloze Vennootschap (Dutch corporation)
SA - Societe Anonyme (French corporation)
See Notes to Financial Statements.
4
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999
GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (100.0%)
Aaa, N/R Fannie Mae................ 5.46% 6/21/00 $ 5,000,000 $ 4,997,478
Aaa, N/R Fannie Mae................ 5.62 8/9/00 4,000,000 3,998,527
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 3,998,711
Aaa, N/R Federal Home Loan Bank.... 5.92 10/13/00 4,000,000 3,998,031
Aaa, N/R Federal Home Loan Bank*... 5.57 1/19/00 10,000,000 10,000,000
Aaa, N/R Sallie Mae*............... 5.59 2/2/00 5,000,000 4,999,708
Aaa, N/R Sallie Mae*............... 5.56 2/25/00 15,000,000 14,999,343
-----------
Total U.S. Government Agency Obligations
(Cost - $51,991,798)................................ 51,991,798
-----------
TOTAL (Cost - $51,991,798) (a)--100.0%............... $51,991,798
===========
</TABLE>
- --------
Percentages indicated are based on market value of investments of $51,991,798.
(a) Cost and value for Federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate represents rate in effect at December 31, 1999.
Date presented represents the next rate change date.
N/R - Not Rated. The security, as judged by the portfolio manager, is
comparable to the quality of investments in which the fund may invest.
See Notes to Financial Statements.
5
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
U.S. TREASURY BILLS
(49.4%)
Aaa, AAA U.S. Treasury Bills....... 4.92% 1/6/00 $2,500,000 $ 2,498,292
Aaa, AAA U.S. Treasury Bills....... 4.80 3/2/00 2,000,000 1,984,733
Aaa, AAA U.S. Treasury Bills....... 4.72 3/30/00 2,500,000 2,472,558
Aaa, AAA U.S. Treasury Bills....... 4.81 4/27/00 2,500,000 2,463,275
Aaa, AAA U.S. Treasury Bills....... 5.17 7/20/00 2,000,000 1,946,009
Aaa, AAA U.S. Treasury Bills....... 5.92 11/9/00 3,500,000 3,332,328
Aaa, AAA U.S. Treasury Bills....... 6.05 11/9/00 1,000,000 951,137
-----------
Total U.S. Treasury Bills
(Cost - $15,648,332)............................... 15,648,332
-----------
REPURCHASE AGREEMENTS
(50.6%)
N/R, N/R Bear, Stearns & Co.,
(Purchased 12/31/99,
collateralized by
$9,115,000 U.S. Treasury
Strips, 8/15/06, market
value $5,912,445)........ 5.35 1/3/00 5,800,000 5,800,000
N/R, N/R Donaldson, Lufkin &
Jenrette Securities
Corp., (Purchased
12/17/99, collateralized
by $4,852,000 U.S.
Treasury Strips, 2/15/07,
market value
$3,057,395).............. 5.50 1/18/00 3,000,000 3,000,000
N/R, N/R Lehman, (Purchased
12/31/99, collateralized
by $6,770,000 U.S.
Treasury Bonds 7.5%,
11/15/16, market value
$7,338,255).............. 3.00 1/3/00 7,200,000 7,200,000
-----------
Total Repurchase Agreements
(Cost - $16,000,000)............................... 16,000,000
-----------
TOTAL (Cost - $31,648,332) (a)--100.0%.............. $31,648,332
===========
</TABLE>
- --------
Percentages indicated are based on market value of investments of $31,648,332.
(a) Cost and value for Federal income tax and financial reporting purposes are
the same.
N/R - Not Rated. The security, as judged by the portfolio manager, is
comparable to the quality of investments in which the fund may invest.
See Notes to Financial Statements.
6
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- ------
<C> <S> <C> <C> <C> <C>
MUNICIPAL COMMERCIAL
PAPER (11.2%)
P-1, A-1+ Long Island Power
Authority
(LOC - Bayerische
Vereinsbank,
Westdeutsche
Landsbank).............. 3.80% 1/24/00 $4,000,000 $ 4,000,000
P-1, A-1+ New York City, GO, Series
H-6 (MBIA Insured)...... 3.90 1/21/00 1,700,000 1,700,000
P-1, A-1 New York State, GO,
Environmental
(LOC - Bayerische
Vereinsbank, Landesbank
Hessen)................. 3.75 1/18/00 2,600,000 2,600,000
P1, A1 New York State, GO,
Environmental
(LOC - Bayerische
Vereinsbank, Landesbank
Hessen)................. 3.80 1/19/00 1,000,000 1,000,000
P1, A1 New York State, Power
Authority
(LOC - Landesbank
Hessen, Commerzbank AG,
Morgan Guaranty Trust,
Credit Locale de France,
Toronto Dominion Bank,
Bank of Nova Scotia).... 3.75 2/7/00 2,500,000 2,500,000
------------
Total Municipal Commercial Paper
(Cost - $11,800,000).............................. 11,800,000
------------
NON-VARIABLE MUNICIPAL BONDS
(39.0%)
Aaa, Aaa Buffalo, School District,
GO, Series E
(FSA Insured)........... 5.00 12/1/00 495,000 499,298
N/R, A-1 Fulton County, Industrial
Development Agency,
Mills Inc. Project,
Series G
(LOC - FleetBoston
Financial Corp.)........ 4.25 12/1/00 230,000 230,000
A2, N/R Kinderhook, Central
School District, GO,
Bond Anticipation Notes,
Series B................ 4.00 8/11/00 2,000,000 2,004,704
Aaa, Aaa New York City, GO,
Escrowed, Series H...... 7.88 8/1/00 500,000 511,985
A3, A- New York City, GO, Series
A....................... 5.40 8/1/00 600,000 605,774
A3, A- New York City, GO, Series
B....................... 5.30 8/15/00 700,000 706,119
A3, A- New York City, GO, Series
F....................... 4.25 8/1/00 1,140,000 1,143,155
A3, A- New York City,
Metropolitan Transit
Authority Revenue,
Series A................ 4.00 4/1/00 4,000,000 4,007,543
Aaa, AAA New York City,
Metropolitan Transit
Authority Revenue,
Series A (AMBAC
Insured)................ 4.50 1/3/00 2,340,000 2,340,123
Aaa, AAA New York City,
Metropolitan Transit
Authority Revenue,
Service Contract, Series
4, Prerefunded 7/1/00 @
101.5................... 7.50 7/1/00 1,000,000 1,034,529
</TABLE>
7
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
NON-VARIABLE MUNICIPAL BONDS
(continued)
Aaa, Aaa New York City, Municipal
Water Finance Authority,
Water and Sewer System
Revenue, Series A, (FGIC
Insured) Prerefunded
6/15/00 @ 101.5......... 7.50% 6/15/00 $ 500,000 $ 515,882
Aaa, Aaa New York State,
Environmental Facilities
Revenue, Water Utility
Improvements, Series B.. 4.00 4/15/00 1,010,000 1,011,536
AAA, N/R New York State, Dormitory
Authority Construction
Revenue, Series A,
Prerefunded 7/1/00 @
102..................... 7.63 7/1/00 500,000 519,816
A2, A New York State, Dormitory
Authority Facilities
Revenue, Series C....... 4.50 7/1/00 890,000 893,022
Aaa, N/R New York State, Dormitory
Authority Revenue,
Prerefunded 7/1/00 @
102..................... 7.88 7/1/00 500,000 520,801
Aaa, AAA New York State, Dormitory
Authority, City
University Revenue,
Series F (FGIC Insured)
Prerefunded 7/1/00 @
102..................... 7.50 7/1/00 500,000 520,017
A-3, A New York State, Dormitory
Authority, Mental Health
Service Facilities
Revenue, Series B....... 5.00 8/15/00 1,000,000 1,005,702
N/R, A New York State, Dormitory
Authority, Mental Health
Services Facilities
Revenue, Series D....... 4.00 2/15/00 635,000 635,266
N/R, A New York State, Dormitory
Authority, Mental Health
Services Facilities
Revenue, Series D....... 4.00 8/15/00 695,000 696,254
Aaa, AAA New York State, Dormitory
Authority, Rochester
Institute of Technology
Revenue (AMBAC
Insured)................ 4.00 7/1/00 480,000 481,513
AAA, NR New York State, Dormitory
Authority, State
University Educational
Facilities Revenue,
Series A, Prerefunded
5/15/00 @ 102........... 7.70 5/15/00 1,100,000 1,136,880
Aaa, Aaa New York State, Dormitory
Authority, State
University Educational
Facilities Revenue,
Series B, Prerefunded
5/15/00 @ 102........... 7.25 5/15/00 500,000 516,099
N/R, AAA New York State, Dormitory
Authority, State
University Educational
Facilities Revenue,
Series C, Prerefunded
5/15/00 @ 100........... 6.13 5/15/00 2,000,000 2,018,874
AAA, N/R New York State, Dormitory
Authority, State
University Educational
Facilities Revenue,
Series C, Prerefunded
5/15/00 @ 102........... 7.00 5/15/00 3,000,000 3,093,878
A3, AA- New York State, Local
Government Assistance
Corp. Revenue, Series
A....................... 6.70 4/1/00 1,930,000 1,945,884
</TABLE>
8
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
NON-VARIABLE MUNICIPAL BONDS
(continued)
Aaa, N/R New York State, Medical
Care Facilities Finance
Agency Revenue,
Prerefunded 8/15/00 @
102..................... 7.88% 8/15/00 $ 500,000 $ 522,799
Aaa, Aaa New York State, Medical
Facilities Revenue,
St. Luke's Hospital,
Series B, Prerefunded
2/15/00 @ 100........... 7.45 2/15/00 1,030,000 1,059,167
Aaa, Aaa New York State, Mental
Health Services
Facilities, Escrowed,
Series A................ 8.00 11/1/00 2,000,000 2,066,674
A-1, AA- New York State, Port
Authority of New York &
New Jersey Revenue...... 4.88 8/1/00 400,000 402,763
N/R, AAA New York State,
Triborough Bridge and
Tunnel Authority
Revenue, Series T,
Prerefunded
1/1/01 @ 102............ 7.00 1/1/01 760,000 796,034
Aaa, AAA New York State, Urban
Development Corp.
Revenue (FSA Insured)
Prerefunded
1/1/00 @ 102............ 7.50 1/1/00 1,800,000 1,836,394
Aaa, N/R North Hampstead, New
York, GO, Series A
(FGIC Insured).......... 4.50 1/15/00 1,000,000 1,000,484
A-2, N/R Oswego County, GO,
Pollution Control
Revenue................. 4.10 4/15/00 850,000 850,067
Aaa, Aaa Suffolk County, Water
System Revenue,
Prerefunded 6/1/00 @
102..................... 6.90 6/1/00 990,000 1,021,569
MIG1, N/R Syracuse, GO, Bond
Anticipation Notes,
AMT..................... 3.75 5/19/00 3,000,000 3,000,450
------------
Total Non-Variable Municipal Bonds
(Cost - $41,151,055).............................. 41,151,055
------------
VARIABLE MUNICIPAL BONDS (49.8%)
VMIG1, N/R Albany, Institute of
History, Civic Facility
Revenue
(LOC - Keybank)*........ 5.50 1/5/00 2,000,000 2,000,000
VMIG1, N/R Chemung County,
Industrial Development
Agency, Series A
(LOC - Chase Manhattan
Bank)*.................. 5.35 1/5/00 2,885,000 2,885,000
VMIG1, A-1+ New York City, GO, Series
D (FGIC Insured)*....... 5.70 1/5/00 2,100,000 2,100,000
VMIG1, A-1+ New York City, GO, Series
F-4, (LOC - Landesbank
Hessen)*................ 5.45 1/5/00 1,225,000 1,225,000
VMG1, A-1+ New York City, GO, Sub-
Series A-6
(LOC - Landesbank
Hessen)*................ 5.45 1/5/00 900,000 900,000
VMIG1, A-1+ New York City, GO, Sub-
Series A-6
(LOC - Landesbank
Hessen)*................ 5.45 1/5/00 1,000,000 1,000,000
VMG1, A-1+ New York City, GO, Sub-
Series A-7 (LOC - Morgan
Guaranty Trust)*........ 4.75 1/3/00 2,600,000 2,600,000
</TABLE>
9
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- -----
<C> <S> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS
(continued)
VMG1, A-1+ New York City, GO, Sub-
Series E-5 (LOC - Morgan
Guaranty Trust)*........ 4.75% 1/3/00 $1,950,000 $ 1,950,000
VMG1, A-1+ New York City, GO, Sub-
Series E-5 (LOC - Morgan
Guaranty Trust)*........ 4.75 1/3/00 1,200,000 1,200,000
P-1, A-1+ New York City, GO, Sub-
Series J-2
(LOC - Commerzbank
A.G.)*.................. 5.75 1/5/00 3,300,000 3,300,000
VMIG1, A-1+ New York City, Housing
Development Corp.,
Multi-Family Rental
Housing Revenue, TriBeCa
Tower, Series A, AMT
(FNMA Collateral)*...... 5.60 1/5/00 2,000,000 2,000,000
N/R, A-1 New York City, Industrial
Development Agency,
Civic Facilities
Revenue, Columbia
Grammar School Project,
(LOC - Chase Manhattan
Bank)*.................. 5.50 1/5/00 900,000 900,000
MIG1, A-1 New York City, Industrial
Development Agency,
Korean Airlines Special
Facilities Revenue,
Series C, AMT
(LOC - Bankers Trust
Company)*............... 5.85 1/5/00 2,800,000 2,800,000
N/R, A-1+ New York State Energy
Research & Development
Authority Pollution
Control Revenue, Niagara
Mohawk Power, Series A
(LOC - Toronto Dominion
Bank)*.................. 4.50 1/3/00 2,200,000 2,200,000
VMIG1, A-1+ New York State Local
Government Assistance
Corp., Revenue, Series B
(LOC - Westdeutsche
Landesbank)*............ 5.40 1/5/00 2,000,000 2,000,000
VMIG1, A-1+ New York State, Dormitory
Authority Revenue,
Municipal Securities
Trust Receipts
(AMBAC Insured)*........ 5.50 1/5/00 4,300,000 4,300,000
MIG1, SP1+ New York State, Energy
Research & Development
Authority, Brooklyn
Union Gas Co. Project,
Series A-1, (MBIA
Insured, SPA - Union
Bank of Switzerland)*... 5.45 1/5/00 4,805,000 4,805,000
VMIG1, N/R New York State, Housing
Finance Agency, 250 West
50th Street Revenue,
Series A, AMT (FNMA
Collateral)*............ 5.50 1/5/00 4,500,000 4,500,000
VMIG1, N/R New York State, Housing
Finance Agency,
East 84th Street
Revenue, Series A
(LOC - Bayerische Hypo-
Und Vereinsbank)*....... 5.60 1/5/00 900,000 900,000
</TABLE>
10
<PAGE>
Schedule of Portfolio Investments as of December 31, 1999 (continued)
NEW YORK TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Moody's/S&P
Ratings Maturity Principal
(unaudited) Security Description Rate Date Amount Value
----------- -------------------- ---- -------- --------- ------
<C> <S> <C> <C> <C> <C>
VARIABLE MUNICIPAL BONDS
(continued)
VMIG1, N/R New York State, Housing
Finance Agency, Saxony
Housing Revenue,
Series A (LOC - Chase
Manhattan Bank)*...... 5.50% 1/5/00 $ 4,600,000 $ 4,600,000
P-1, A-1+ New York State, Niagara
County, Industrial
Development Agency,
Solid Waste Disp.
Revenue, Series A
(LOC - Wachovia Bank
of North Carolina)*... 5.50 1/5/00 590,000 590,000
VMIG1, A1+ New York State,
Triborough Bridge &
Tunnel Authority
Revenue, Series C
(AMBAC Insured,
SPA - Westdeutsche
Landesbank)*.......... 5.40 1/6/00 2,500,000 2,500,000
VMIG1, N/R Wallkill, Industrial
Development Agency,
Pollution Control
Revenue, Reynolds
Metals Co. Project
Revenue
(LOC - Dresdner Bank
AG)*.................. 5.00 1/5/00 500,000 500,000
VMIG1, N/R Yonkers, Industrial
Development Agency,
Civic Facilities
Revenue, Consumers
Union Facility
(LOC - Credit Local de
France)*.............. 5.65 1/5/00 800,000 800,000
------------
Total Variable Municipal Bonds
(Cost - $52,555,000).............................. 52,555,000
------------
TOTAL (Cost - $105,506,055)(a)--(100.0%)........... $105,506,055
============
</TABLE>
- --------
Percentages indicated are based on market value of investments of $105,506,055.
(a) Cost and value for Federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate represents rate in effect at December 31,
1999. Date presented represents next rate change 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
FSA - Financial Security Assurance, Inc.
GO - General Obligation
LOC - Letter of Credit
MBIA - Municipal Bond Insurance Association
N/R - Not Rated. The security, as judged by the portfolio manager, is
comparable to the quality of investments in which the fund may invest.
SPA - Standby Purchase Agreement
See Notes to Financial Statements.
11
<PAGE>
Statements of Assets and Liabilities
December 31, 1999
<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
(cost $387,946,524,
$51,991,798,
$15,648,332, and
$105,506,055,
respectively)......... $387,946,524 $51,991,798 $15,648,332 $105,506,055
Repurchase agreements
(cost $0, $0,
$16,000,000,
and $0,
respectively)......... -- -- 16,000,000 --
------------ ----------- ----------- ------------
Total Investments..... 387,946,524 51,991,798 31,648,332 105,506,055
Cash................... -- 794,807 950,801 714,263
Interest and dividends
receivable............ 4,289,815 529,221 22,105 1,026,429
Prepaid expenses....... 44,446 9,557 5,288 14,309
------------ ----------- ----------- ------------
Total Assets............ 392,280,785 53,325,383 32,626,526 107,261,056
------------ ----------- ----------- ------------
LIABILITIES:
Cash Overdraft......... 8,033,392 -- -- --
Dividends payable...... 1,683,503 231,635 125,632 283,732
Accrued expenses and
other payables:
Investment advisory
fee.................. 71,661 16,483 6,287 21,468
Administration fee.... 29,488 4,709 2,800 8,961
Distribution fees..... 48,609 3,024 2,129 13,619
Other................. 107,750 21,495 37,533 40,019
------------ ----------- ----------- ------------
Total Liabilities....... 9,974,403 277,346 174,381 367,799
------------ ----------- ----------- ------------
Net Assets.............. $382,306,382 $53,048,037 $32,452,145 $106,893,257
============ =========== =========== ============
COMPOSITION OF NET
ASSETS:
Paid-in capital........ $382,312,086 $53,050,644 $32,454,248 $106,906,964
Accumulated net
realized losses from
investment
transactions.......... (5,704) (2,607) (2,103) (13,707)
------------ ----------- ----------- ------------
Net Assets.............. $382,306,382 $53,048,037 $32,452,145 $106,893,257
============ =========== =========== ============
COMPUTATION OF NET ASSET
VALUE:
Class A:
Net assets............ $382,296,064 $53,048,037 $32,452,145 $106,893,257
Shares of beneficial
interest issued and
outstanding
(par value $0.001 per
share, unlimited
number of shares
authorized).......... 382,298,634 53,051,511 32,452,622 106,902,049
------------ ----------- ----------- ------------
Net asset value,
offering price and
redemption price
per share............ $1.00 $1.00 $1.00 $1.00
============ =========== =========== ============
Class B*:
Net assets............ $ 5,081
Shares of beneficial
interest issued and
outstanding
(par value $0.001 per
share, unlimited
number of shares
authorized).......... 5,081
------------
Net asset value,
offering price and
redemption price
per share............ $1.00
============
Class C*:
Net assets............ $ 5,237
Shares of beneficial
interest issued and
outstanding
(par value $0.001 per
share, unlimited
number of shares
authorized).......... 5,237
------------
Net asset value,
offering price and
redemption price
per share............ $1.00
============
</TABLE>
- --------
* Class B and Class C shares commenced offering on July 1, 1999.
See Notes to Financial Statements.
12
<PAGE>
Statements of Operations
For the year ended December 31, 1999
<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.................. $19,251,210 $3,202,871 $1,633,637 $3,241,970
Dividends................. 285,726 34,926 16,357 86,792
----------- ---------- ---------- ----------
Total Income............... 19,536,936 3,237,797 1,649,994 3,328,762
----------- ---------- ---------- ----------
EXPENSES:
Investment advisory fees.. 1,287,655 218,297 116,732 357,951
Administration fees....... 509,638 93,557 50,028 153,409
Co-administration and
shareholder servicing
fees..................... 257,531 43,660 23,346 71,590
Service organization fees
(Class C)................ 4 -- -- --
Distribution fees (Class
A)....................... 558,302 24,258 26,041 121,780
Distribution fees (Class
C)....................... 7 -- -- --
Custodian fees............ 35,270 11,155 17,003 14,072
Transfer agent fees....... 271,819 52,779 24,032 67,467
Other expenses............ 396,686 88,738 46,888 116,190
----------- ---------- ---------- ----------
Total expenses before fee
reductions and
reimbursements.......... 3,316,912 532,444 304,070 902,459
Fee reductions and
reimbursement
of expenses............. (915,037) (128,679) (87,276) (237,689)
----------- ---------- ---------- ----------
Net Expenses............... 2,401,875 403,765 216,794 664,770
----------- ---------- ---------- ----------
Net Investment Income...... 17,135,061 2,834,032 1,433,200 2,663,992
----------- ---------- ---------- ----------
NET REALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from investment
transactions............. 82 (1,539) (1,727) --
----------- ---------- ---------- ----------
Net Realized Gains
(Losses) from
Investments.............. 82 (1,539) (1,727) --
----------- ---------- ---------- ----------
Change in Net Assets
Resulting from
Operations................ $17,135,143 $2,832,493 $1,431,473 $2,663,992
=========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Cash Management Fund
-----------------------------------
For the For the
Year Ended Year Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
From Investment Activities:
OPERATIONS:
Net investment income..................... $ 17,135,061 $ 12,187,455
Net realized gains (losses) from
investment transactions.................. 82 (45)
------------ ------------
Change in net assets resulting from
operations............................... 17,135,143 12,187,410
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Class A.................................. (17,134,825) (12,187,455)
Class B*................................. (122) --
Class C*................................. (114) --
------------ ------------
Change in net assets from shareholder
distributions............................ (17,135,061) (12,187,455)
------------ ------------
Change in net assets from capital share
transactions............................. 64,754,179 133,346,902
------------ ------------
Change in Net Assets...................... 64,754,261 133,346,857
------------ ------------
NET ASSETS:
Beginning of period....................... 317,552,121 184,205,264
------------ ------------
End of period............................. $382,306,382 $317,552,121
============ ============
</TABLE>
- --------
*Class B and Class C commenced offering on July 1, 1999.
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
<CAPTION>
Government Money Market Fund U.S. Treasury Money Market Fund New York Tax-Free Money Market Fund
- ------------------------------------ ----------------------------------- -----------------------------------
For the For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, 1999 December 31, 1998 December 31, 1999 December 31, 1998 December 31, 1999 December 31, 1998
- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 2,834,032 $ 4,507,202 $ 1,433,200 $ 1,407,739 $ 2,663,992 $ 2,392,306
(1,539) (144) (1,727) 722 -- (1,031)
------------ ------------ ----------- ----------- ------------ -----------
2,832,493 4,507,058 1,431,473 1,408,461 2,663,992 2,391,275
------------ ------------ ----------- ----------- ------------ -----------
(2,834,032) (4,507,202) (1,433,200) (1,407,739) (2,663,992) (2,392,306)
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------------ ----------- ----------- ------------ -----------
(2,834,032) (4,507,202) (1,433,200) (1,407,739) (2,663,992) (2,392,306)
------------ ------------ ----------- ----------- ------------ -----------
(24,304,197) (23,507,694) 6,578,132 367,751 12,633,917 7,531,544
------------ ------------ ----------- ----------- ------------ -----------
(24,305,736) (23,507,838) 6,576,405 368,473 12,633,917 7,530,513
------------ ------------ ----------- ----------- ------------ -----------
77,353,773 100,861,611 25,875,740 25,507,267 94,259,340 86,728,827
------------ ------------ ----------- ----------- ------------ -----------
$ 53,048,037 $ 77,353,773 $32,452,145 $25,875,740 $106,893,257 $94,259,340
============ ============ =========== =========== ============ ===========
</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.
Effective July 1, 1999 the Funds were authorized to issue three classes of
shares as follows: Class A, Class B, and Class C. At December 31, 1999, the
Funds had not issued Class B and Class C shares with the exception of the
Cash Management Fund, which has both Class B and Class C shares
outstanding. Class B and Class C shares are subject to a contingent
deferred sales charge at the time of the redemption. Class A, Class B, and
Class C shares bear distribution (12b-1) fees. Class B and Class C bear
service organization fees. Each class has identical rights and privileges
except with respect to the distribution (12b-1) fees and the service
organization fees paid by each respective class, voting matters affecting a
single class of shares and the exchange privileges of each class of shares.
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
Trustees. 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
16
<PAGE>
Notes to Financial Statements (continued)
and net realized capital gains, if any, to its shareholders for each
taxable year. Therefore, no provision is required for Federal income tax.
For Federal income tax purposes, the following Funds have capital loss
carryforwards as of December 31, 1999, which are available to offset future
gains, if any:
<TABLE>
<CAPTION>
Amount Expires
------ -------
<C> <S> <C>
Cash Management Fund............................ $ 2,228 2003
2,993 2004
----------------
$ 5,221
================
Government Money Market Fund.................... $ 252 2003
342 2004
330 2005
16 2006
597 2007
----------------
$ 1,537
================
U.S. Treasury Money Market Fund................. $ 300 2006
================
New York Tax-Free Money Market Fund............. $ 3,591 2001
1,324 2002
136 2003
240 2004
7,386 2005
1,030 2006
----------------
$13,707
================
</TABLE>
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 least
equal to 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.
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.
17
<PAGE>
Notes to Financial Statements (continued)
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 the trade date. Interest income is recorded on the accrual
basis and includes, where applicable, the amortization of premium or
accretion of discount. Securities gains and losses are calculated on the
identified cost basis.
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. accrues
daily, and 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. agreed to contractually limit expenses
through December 31, 1999 by waiving or reimbursing its Investment Advisor
fee to the extent the ordinary operating expenses exceed 0.70% of average
daily net assets for Class A shares and 1.70% for Class B and Class C
shares for each Fund, with the exception of the Cash Management Fund for
which the contractual limitations are 0.93% for Class A shares and 1.63%
for Class B shares. HSBC Asset Management Americas Inc. has further
voluntarily agreed to reimburse Fund expenses to the extent each Fund's
operating expenses net of other fee waivers exceed 0.65% for Class A shares
and 1.65% for Class B and Class C shares (1.35% for Class B and Class C
shares in the Cash Management Fund) of each Fund's average daily net
assets.
18
<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% (Class A shares) and 0.50% (Class B and Class C shares each)
of the average value of the Funds' shares held in the sub-accounts of the
Service Organizations. During the year ended December 31, 1999, the Funds
Class A shares did not participate in any service agreement. BISYS Fund
Services waived service organization fees for the Cash Management Fund,
Class C in the amount of $2.
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 accrues
daily, and is paid monthly, an 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>
BISYS is contractually limiting its Administration fee to 0.10% of each
Fund's average net assets.
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. Effective July 1, 1999, HSBC Asset Management Americas
Inc. no longer charges co-administration and shareholder services
assistance fees.
Information regarding these fee waivers for the year ended December 31,
1999 follows:
<TABLE>
<CAPTION>
Co-Administration
Investment Administration and Shareholder
Advisory Fees Fees Servicing Fees
reimbursed waived waived
------------- -------------- -----------------
<S> <C> <C> <C>
Cash Management Fund.......... $473,546 $183,958 $257,531
Government Money Market Fund.. 53,833 31,186 43,660
U.S. Treasury Money Market
Fund......................... 47,254 16,676 23,346
New York Tax-Free Money Market
Fund......................... 114,961 51,138 71,590
</TABLE>
19
<PAGE>
Notes to Financial Statements (continued)
With respect to Class A, 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 average net assets of
Class A shares during the preceding month.
Similarly, with respect to Class B and Class C, 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 0.75% of the average
net assets of Class B and Class C shares 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 year ended December 31, 1999. For the year ended December
31, 1999, legal fees incurred by the Funds totaled $116,041 for the Cash
Management Fund, $15,194 for the Government Money Market Fund, $10,799 for
the U.S. Treasury Money Market Fund and $31,621 for the New York Tax-Free
Money Market Fund, respectively.
20
<PAGE>
Notes to Financial Statements (continued)
4.Shares of Beneficial Interest
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. Transactions in
shares of beneficial interest and capital transactions were as follows:
<TABLE>
<CAPTION>
Cash Management Fund Government Money Market Fund
-------------------------------- --------------------------------
For the Year Ended December 31, For the Year Ended December 31,
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Class A Shares:
Proceeds from shares
issued............... $ 1,597,112,073 $ 1,341,762,133 $ 148,558,159 $ 245,113,875
Dividends reinvested.. 13,695,775 9,085,388 1,046,797 2,003,878
Cost of shares
redeemed............. (1,546,063,987) (1,217,500,619) (173,909,153) (270,625,447)
--------------- --------------- --------------- ---------------
Class A capital
transactions......... $ 64,743,861 $ 133,346,902 $ (24,304,197) $ (23,507,694)
--------------- --------------- --------------- ---------------
Class C Shares:*
Proceeds from shares
issued............... $ 5,555 $ -- $ -- $ --
Dividends reinvested.. 97 -- -- --
Cost of shares
redeemed............. (415) -- -- --
--------------- --------------- --------------- ---------------
Class C capital
transactions......... $ 5,237 -- -- --
--------------- --------------- --------------- ---------------
Total net increase from
capital
transactions.......... $ 64,749,098 $ 133,346,902 $ (24,304,197) $ (23,507,694)
=============== =============== =============== ===============
SHARE TRANSACTIONS:
Class A Shares:
Issued................ 1,597,112,073 1,341,762,133 148,558,159 245,113,875
Reinvested............ 13,695,775 9,085,388 1,046,797 2,003,878
Redeemed.............. (1,546,063,987) (1,217,500,619) (173,909,153) (270,625,447)
--------------- --------------- --------------- ---------------
Class A share
transactions......... 64,743,861 133,346,902 (24,304,197) (23,507,694)
--------------- --------------- --------------- ---------------
Class C Shares:*
Issued................ 5,555 -- -- --
Reinvested............ 97 -- -- --
Redeemed.............. (415) -- -- --
--------------- --------------- --------------- ---------------
Class C share
transactions......... 5,237 -- -- --
--------------- --------------- --------------- ---------------
Total net increase from
share
transactions.......... 64,749,098 133,346,902 (24,304,197) (23,507,694)
=============== =============== =============== ===============
</TABLE>
During the year ended December 31, 1999, the Cash Management Fund received
proceeds of $5,000 for 5,000 Class B seed money shares issued and $81 in
reinvested dividends.
* Class C commenced offering on July 1, 1999.
21
<PAGE>
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
New York Tax-Free
U.S. Treasury Money Market Fund Money Market Fund
-------------------------------- --------------------------------
For the Year Ended December 31, For the Year Ended December 31,
-------------------------------- --------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Class A Shares:
Proceeds from shares
issued............... $ 163,205,293 $ 175,531,472 $ 165,282,874 $ 169,582,662
Dividends reinvested.. 1,006,458 758,783 2,019,666 1,732,131
Cost of shares
redeemed............. (157,633,619) (175,922,504) (154,668,623) (163,783,249)
--------------- --------------- --------------- ---------------
Total net increase from
capital transactions.. $ 6,578,132 $ 367,751 $ 12,633,917 $ 7,531,544
=============== =============== =============== ===============
SHARE TRANSACTIONS:
Class A Shares:
Issued................ 163,205,293 175,531,472 165,282,874 169,582,662
Reinvested............ 1,006,458 758,783 2,019,666 1,732,131
Redeemed.............. (157,633,619) (175,922,504) (154,668,623) (163,783,249)
--------------- --------------- --------------- ---------------
Total net increase from
share transactions.... 6,578,132 367,751 12,633,917 7,531,544
=============== =============== =============== ===============
</TABLE>
5.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 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.
6.Federal Income Tax Information (Unaudited)
For the taxable year ended December 31, 1999, the New York Tax-Free Money
Market Fund declared tax-exempt income distributions of $2,568,318.
22
<PAGE>
FINANCIAL HIGHLIGHTS
CASH MANAGEMENT FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each
Year and Periods Indicated.
<TABLE>
<CAPTION>
Class A Class C**
------------------------------------------------ -----------------
For the Year Ended December 31,
------------------------------------------------ Period Ended
1999 1998 1997 1996 1995 December 31, 1999
-------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------
Investment Activities
Net investment income.. 0.046 0.050 0.051 0.049 0.053 0.023
Distributions
From net investment
income................ (0.046) (0.050) (0.051) (0.049) (0.053) (0.023)
-------- -------- -------- -------- -------- -------
Net Asset Value, End
of Period.............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== =======
Total Return............ 4.75% 5.15% 5.18% 5.00% 5.41% 2.28%(a)
Ratios/Supplemental
Data:
Net assets at end of
period (000).......... $382,296 $317,552 $184,205 $220,960 $170,869 $ 5
Ratio of expenses to
average net assets.... 0.65% 0.65% 0.63% 0.68% 0.79% 1.02%(b)
Ratio of net investment
income to average
net assets............ 4.66% 5.01% 5.06% 4.88% 5.29% 4.47%(b)
Ratio of expenses to
average net assets*... 0.90% 0.87% 0.83% 0.80% 0.80% 1.17%(b)
</TABLE>
- --------
(a) Not annualized.
(b) Annualized.
* During the period, certain fees were reduced and/or reimbursed. If such fee
reductions and/or reimbursements had not occurred, the ratios would have
been as indicated.
** Class C commenced operation on July 1, 1999.
23
<PAGE>
FINANCIAL HIGHLIGHTS
GOVERNMENT MONEY MARKET FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each
Year Indicated.
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------
1999 1998 1997 1996 1995
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- -------- ------- -------
Investment Activities
Net investment income........... 0.046 0.049 0.049 0.048 0.052
------- ------- -------- ------- -------
Total from Investment
Activities...................... 0.046 0.049 0.049 0.048 0.052
------- ------- -------- ------- -------
Distributions
From net investment income...... (0.046) (0.049) (0.049) (0.048) (0.052)
------- ------- -------- ------- -------
Total Distributions.............. (0.046) (0.049) (0.049) (0.048) (0.052)
------- ------- -------- ------- -------
Net Asset Value, End of
Period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======== ======= =======
Total Return..................... 4.65% 5.01% 5.05% 4.87% 5.32%
Ratios/Supplemental Data:
Net assets at end of
period (000)................... $53,048 $77,354 $100,862 $87,392 $86,850
Ratio of expenses to average net
assets......................... 0.65% 0.62% 0.63% 0.72% 0.76%
Ratio of net investment income
to average net assets.......... 4.54% 4.86% 4.94% 4.75% 5.21%
Ratio of expenses to average net
assets*........................ 0.85% 0.80% 0.79% 0.84% 0.78%
</TABLE>
- --------
* During the period, certain fees were reduced and/or reimbursed. If such fee
reductions and/or reimbursements had not occurred, the ratios would have
been as indicated.
24
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. TREASURY MONEY MARKET FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each
Year Indicated.
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Activities
Net investment income............ 0.043 0.048 0.049 0.046 0.049
------- ------- ------- ------- -------
Total from Investment Activities.. 0.043 0.048 0.049 0.046 0.049
------- ------- ------- ------- -------
Distributions
From net investment income....... (0.043) (0.048) (0.049) (0.046) (0.049)
------- ------- ------- ------- -------
Total Distributions............... (0.043) (0.048) (0.049) (0.046) (0.049)
------- ------- ------- ------- -------
Net Asset Value, End of
Period........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Return...................... 4.39% 4.86% 4.98% 4.68% 5.04%
Ratios/Supplemental Data:
Net assets at end of
period (000).................... $32,452 $25,876 $25,507 $28,962 $32,500
Ratio of expenses to average net
assets.......................... 0.65% 0.65% 0.65% 0.78% 0.82%
Ratio of net investment income to
average net assets.............. 4.30% 4.75% 4.86% 4.57% 4.94%
Ratio of expenses to average net
assets*......................... 0.91% 0.94% 0.94% 0.95% 0.84%
</TABLE>
- --------
* During the period, certain fees were reduced and/or reimbursed. If such fee
reductions and/or reimbursements had not occurred, the ratios would have
been as indicated.
25
<PAGE>
FINANCIAL HIGHLIGHTS
NEW YORK TAX-FREE MONEY MARKET FUND
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each
Year Indicated.
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------
1999 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ------- ------- ------- -------
Investment Activities
Net investment income........... 0.026 0.028 0.031 0.029 0.031
-------- ------- ------- ------- -------
Total from Investment
Activities...................... (0.026) 0.028 0.031 0.029 0.031
-------- ------- ------- ------- -------
Distributions
From net investment income...... (0.026) (0.028) (0.031) (0.029) (0.031)
-------- ------- ------- ------- -------
Total Distributions.............. 0.026 (0.028) (0.031) (0.029) (0.031)
-------- ------- ------- ------- -------
Net Asset Value, End of
Period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======= ======= ======= =======
Total Return..................... 2.64% 2.83% 3.14% 2.92% 3.17%
Ratios/Supplemental Data:
Net assets at end of
period (000)................... $106,893 $94,259 $86,729 $70,339 $64,884
Ratio of expenses to average net
assets......................... 0.65% 0.64% 0.52% 0.59% 0.69%
Ratio of net investment income
to average net assets.......... 2.61% 2.78% 3.09% 2.88% 3.13%
Ratio of expenses to average net
assets*........................ 0.88% 0.82% 0.80% 0.87% 0.85%
</TABLE>
- --------
* During the period, certain fees were reduced and/or reimbursed. If such fee
reductions and/or reimbursements had not occurred, the ratios would have
been as indicated.
26
<PAGE>
Report of Independent Auditors
The Board of Trustees and Shareholders
HSBC Funds Trust
We have audited the accompanying statements of assets and liabilities,
including the schedules of portfolio investments, of 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 (four of the portfolios comprising HSBC
Funds Trust) as of December 31, 1999, the related statements of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the custodian and others. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of 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 at December 31,
1999, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and their
financial highlights for each of the indicated periods, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
February 23, 2000
27
<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
HSBC(SM) 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.
2/00
Annual Report
December 31, 1999
Managed by:
HSBC Asset Management Americas Inc.
Sponsored and distributed by:
BISYS Fund Services
