<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:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only(as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
HSBC MUTUAL 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>
HSBC MUTUAL FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on May 10, 1999
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the HSBC
Mutual Funds Trust (the "Trust"), and each series of the Trust, the Growth and
Income Fund, Fixed Income Fund, International Equity Fund and the New York
Tax-Free Bond 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 May 10, 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 to
permit each Fund to make loans, including loans of its portfolio securities
if, as a result, the aggregate of such loans does not exceed 33 1/3% of the
value of a Fund's total assets.
5. To approve a change in the investment policies of all of the Funds to
permit each Fund to: (i) borrow from banks, for any purpose, up to 33 1/3%
of the current value of its total assets; (ii) pledge up to 33 1/3% of its
total assets to secure such borrowings; and (iii) to eliminate any limits
on purchasing securities when borrowings exist.
6. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to remove the restriction on each
Fund purchasing securities of any company with a record of less than three
years' continuous operation if such purchase would cause the Fund's
investments in all such companies taken at cost to exceed 5% of the total
assets of the Fund.
7. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to remove the restriction on each
Fund investing in warrants in excess of 5% of the Fund's net assets, and to
remove the restriction on the Funds investing in warrants which are listed
on the New York or American Stock Exchanges in excess of 2% of the Fund's
net assets.
8. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to permit each Fund to purchase or
retain securities of any company which the officers and trustees of the
trust, and officers and directors of the adviser, who individually own more
than 1/2 of 1% of the securities of that company, together own beneficially
more than 5% of such company.
9. To approve a change in the investment policies of all of the Funds to
remove the restriction on each Fund participating on a joint, or a joint
and several basis, in any securities trading account.
10. To approve a change in the investment policies of the Growth and
Income Fund and the New York Tax-Free Bond Fund to permit each Fund to
invest up to 15% of its net assets in illiquid securities.
11. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to provide that each Fund, with
respect to 75% of its total assets (taken at market value), may not
purchase a security if as a result (1) more than 5% of its total assets
(taken at market value) would be
<PAGE>
invested in the securities (including securities subject to repurchase
agreements), of any one issuer, other than obligations which are issued or
guaranteed by the United States Government, its agencies or
instrumentalities or (2) the Fund would own more than 10% of the
outstanding voting securities of such issuer.
12. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Trustees of the Funds has fixed the close of business on March
24, 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
March 29, 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.
2
<PAGE>
HSBC MUTUAL FUNDS TRUST
3435 Stelzer Road
Columbus, Ohio 43219
SPECIAL MEETING OF SHAREHOLDERS
May 10, 1999
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of the HSBC Mutual Funds Trust (the "Trust")
to be voted at a Special Meeting of the Shareholders of the Trust
("Shareholders") to be held on May 10, 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 Growth and Income Fund, Fixed Income Fund, International Equity
Fund and the New York Tax-Free Bond Fund (each a "Fund" and collectively the
"Funds") on or about March 29, 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 11 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 11 are as follows:
4. To approve a change in the investment policies of all of the Funds to
permit each Fund to make loans, including loans of its portfolio securities
if, as a result, the aggregate of such loans does not exceed 33 1/3% of the
value of a Fund's total assets.
5. To approve a change in the investment policies of all 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,
except the International Equity Fund, to remove the restriction on each
Fund purchasing securities of any company with a record of less than three
years' continuous operation if such purchase would cause the Fund's
investments in all such companies taken at cost to exceed 5% of the total
assets of the Fund.
7. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to remove the restriction on each
Fund investing in warrants in excess of 5% of the Fund's net assets, and to
remove the restriction on the Funds investing in warrants which are listed
on the New York or American Stock Exchanges in excess of 2% of the Fund's
net assets.
<PAGE>
8. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to permit each Fund to purchase or
retain securities of any company which the officers and trustees of the
trust, and officers and directors of the adviser, who individually own more
than 1/2 of 1% of the securities of that company, together own beneficially
more than 5% of such company.
9. To approve a change in the investment policies of all of the Funds to
remove the restriction on the Funds participating on a joint, or a joint
and several basis, in any securities trading account.
10. To approve a change in the investment policies of the Growth and
Income Fund and the New York Tax-Free Bond Fund to permit each Fund to
invest up to 15% of its net assets in illiquid securities.
11. To approve a change in the investment policies of all of the Funds,
except the International Equity Fund, to provide that each Fund, with
respect to 75% of its total assets (taken at market value), may not
purchase a security if as a result (1) more than 5% of its total assets
(taken at market value) would be invested in the securities (including
securities subject to repurchase agreements), of any one issuer, other than
obligations which are issued or guaranteed by the United States Government,
its agencies or instrumentalities or (2) the Fund would own more than 10%
of the outstanding voting securities of such issuer.
12. 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 29, 1999,
primarily by mail, but proxy solicitations also may be made by telephone,
facsimile via the internet or through 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 Mutual
Funds Trust, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219.
Outstanding Shares
Except for the International Fund, each Fund offers only one class of
shares. The International Fund has two classes of shares, a Service Class and
an Institutional Class. The following table sets forth the net assets and
approximate number of shares issued and outstanding for each class of each
Fund as of the close of business on March 24, 1999, the record date.
<TABLE>
<CAPTION>
Fund Outstanding Shares
---- ------------------
<S> <C>
Growth and Income Fund 7,780,548.14
Fixed Income Fund 5,221,635.02
New York Tax-Free Bond Fund 2,869,411.18
International Equity Fund
Institutional Class 5,606,574.90
Service Class 20,054.54
</TABLE>
Each class of shares has an unlimited number of shares of beneficial
interest in the Fund (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 class of each Fund as of
March 10, 1999.
2
<PAGE>
5% Owners
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
as of March 24, 1999, the record date.
<TABLE>
<CAPTION>
Percent of
Title of Fund Name and Address Total Shares Class Owned
------------- ---------------- ------------ -----------
<S> <C> <C> <C>
Growth and Income Fund Marine Midland Bank 7,202,277.44 92.57%
One Marine Midland Center
Buffalo, NY 14240
Fixed Income Fund Marine Midland Bank 5,080,700.95 97.30%
One Marine Midland Center
Buffalo, NY 14240
New York Tax-Free Bond Marine Midland Bank 679,033.90 23.66%
Fund One Marine Midland Center
Buffalo, NY 14240
International Equity Fund Marine Midland Bank 5,604,756.03 99.97%
Institutional Class One Marine Midland Center
Buffalo, NY 14240
International Equity Fund Donaldson Lufkin Jenrette 1,264.10 6.30%
Service Class Securities Corporation Inc.
P.O. Box 2052
Jersey City NJ
International Equity Fund Donaldson Lufkin Jenrette 1,187.76 5.92%
Service Class Securities Corporation Inc.
P.O. Box 2052
Jersey City NJ
International Equity Fund Paul M. Dudney 4,772.97 23.80%
Service Class Tophill Crosskeys
Seven Oaks
Kent, England 205 TN13
</TABLE>
3
<PAGE>
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 selection of independent accountants. All Funds
4. Change the Funds' investment policies regarding their All Funds
ability to make loans.
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 purchasing All Funds except
securities of a company with less than three years' International
continuous operation. Equity Fund
7. Change the Funds' investment policies regarding purchasing All Funds except
warrants. International
Equity Fund
8. Change the Funds' investment policies regarding purchasing All Funds except
securities of a company which the officers and trustees of International
the trust and officers and of the adviser own, in the Equity Fund
aggregate, 5% of the company.
9. Change the Funds' investment policies regarding their All Funds
ability to participate on a joint basis in any securities
trading account.
10. Change the Funds' investment policies regarding investments Growth and Income Fund
in illiquid securities. New York Tax-Free
Bond Fund
11. Change the Funds' investment policies regarding All Funds except
concentration in a single issuer. International Equity Fund
</TABLE>
The record date for determining Shareholders entitled to vote at the meeting
is March 24, 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 11 require a vote of the "majority of the
outstanding voting securities," which is defined in the 1940 Act 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 and 3. All Shares of each Fund will vote together
as a single class on Proposals 2 and 4 through 11. 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
4
<PAGE>
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 11, but have no effect with respect to
Proposals 1 and 3.
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 the Fund entitled to vote at the Special Meeting.
5
<PAGE>
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. Although not required to do so by the 1940
Act, the Trustees are asking that Shareholders ratify the election of each of
the four existing 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.
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. All Shares represented by valid proxies will
be 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
Name and Age With Trust Principal Occupation For Past 5 Years
------------ ---------------- -------------------------------------
<S> <C> <C>
Wolfe J. Frankl, Age 78 Trustee since 1989. Trustee, The Excelsior Funds;
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 since 1995-1996: President, Aspen
May 5, 1998. 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 of Trustees. 1997-present: Managing
60 Trustee since 1996. Director, Adirondack Capital;
1991-present: President,
Paumgarten and Company.
John P. Pfann, Age 69 Trustee since 1989. 1982-1995:Chairman and
President, JPP Equities, Inc.;
Trustee, HSBC Funds Trust.
Robert A. Robinson, Age Trustee since 1989. 1984-present: Trustee, The
73 Henrietta E. and Frederick H.
Bugher Foundation; 1987-
present: Director, Excelsior
Funds, Inc., Excelsior Tax-
Exempt Funds, Inc., and
Excelsior Institutional Funds,
Inc. (since 1996); 1995-
present: Director, Infinity
Mutual Funds, Inc.; 1980-
present: Trustee, HSBC Mutual
Funds Trust.
</TABLE>
6
<PAGE>
The table on page 18 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.
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 November 1, 1989. 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 is 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. HSBC Asset Management Americas Inc. is 100% owned by HSBC Investment
Bank Holdings B.V. which is 100% owned by HSBC Holdings B.V. which is 100%
owned by HSBC Finance (Netherlands) Ltd. which is ultimately owned by HSBC
Holdings plc. HSBC Holdings plc is located at 10 Lower Thames, London, England
EC3R 6AE. The Adviser currently manages over $3.3 billion of assets of
individuals, pension plans, corporations and institutions.
The Adviser has retained Delaware International, 80 Cheapside, Third Floor,
London, England EC2V 6EE to serve as the investment sub-adviser to the
International Equity Fund.
Advisory Agreement
The current Advisory Agreement between the Adviser and the Trust was first
executed on May 1, 1990. 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.
7
<PAGE>
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.
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:
For the International Equity Fund, the Adviser is paid a monthly advisory
fee at an annual rate of 0.90% of the Fund's average daily net assets.
Growth and Income and Fixed Income Funds
<TABLE>
<CAPTION>
Portion of Average Daily Value of Net Assets of
the Growth and Income Fund and Fixed Income Fund Advisory Fee
------------------------------------------------ ------------
<S> <C>
Not exceeding $400 million 0.550%
In excess of $400 million but not exceeding $800 million 0.505%
In excess of $800 million but not exceeding $1.2 billion 0.460%
In excess of $1.2 billion but not exceeding $1.6 billion 0.415%
In excess of $1.6 billion but not exceeding $2 billion 0.370%
In excess of $2 billion 0.315%
</TABLE>
New York Tax-Free Bond Fund
<TABLE>
<CAPTION>
Portion of Average Daily Value of Net Assets
of the New York Tax-Free Bond Fund Advisory Fee
-------------------------------------------- ------------
<S> <C>
Not exceeding $300 million 0.450%
In excess of $300 million but not exceeding $600 million 0.420%
In excess of $600 million but not exceeding $1 billion 0.385%
In excess of $1 billion but not exceeding $1.5 billion 0.350%
In excess of $1.5 billion but not exceeding $2 billion 0.315%
In excess of $2 billion 0.280%
</TABLE>
For the fiscal year ended December 31, 1998, pursuant to the Advisory
Agreement, the Adviser earned $88,170 from the Fixed Income Fund, $518,499
from the Growth and Income Fund and $309,890 from the New York Tax-Free Bond
Fund in investment advisory fees. For the fiscal year ended December 31, 1998,
pursuant to the Advisory Agreement, the Adviser earned $336,751 in investment
advisory fees from the International Equity Fund, net of voluntary fee waivers
of $336,751.
During the year ended December 31, 1998, no commissions were paid to brokers
affiliated with HSBC Asset Management Americas Inc.
8
<PAGE>
Adviser's Principal Executive Officers and Directors
The name, address and principal occupation of the Adviser's principal
executive officers and each director or general partner is set forth below.
<TABLE>
<CAPTION>
Name Current Position Principal Occupation
---- ---------------- --------------------
<C> <C> <S>
Paul Guidone Chairman of the Board Group Chief, Executive
Officer HSBC Asset
Management Americas Inc.
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 Global Head of Human
Resources HSBC Asset
Management Americas Inc.
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--U.S. Equity Managing Director--U.S.
Trading Equity Trading of HSBC
Asset Management Americas
Inc.
Stella Yiu Managing Director--Head of Managing Director--Head of
Global Emerging Markets Global Emerging Markets of
HSBC Asset Management
Americas Inc.
Joseph DiBartolo Corporate Secretary--Local Corporate Secretary--Local
Compliance Officer Compliance Officer of HSBC
Asset Management Americas
Inc.
Andrea Shaw Resnick Vice President Vice President, HSBC Asset
Management Americas Inc.
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 is:
HSBC Asset Management Americas, Inc.
140 Broadway
New York, NY 10005
No officers or directors of the Adviser are also a director, officer or
general partner of the Trust.
Required Vote and Recommendation
As provided in the 1940 Act, approval of the Funds' 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 its alternatives consistent with the 1940 Act.
THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 2 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 2.
9
<PAGE>
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 the 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.
THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 3 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 3.
PROPOSALS 4 THROUGH 11: APPROVAL OF CHANGES
TO THE FUNDS' INVESTMENT POLICIES
Proposals 4 through 11 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 11. 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 Fund will remain unchanged.
PROPOSAL 4. (All Funds)
To approve a change in the investment policies of all of the Funds, 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.
Currently the Fixed Income Fund may not loan more than 10% of the value of its
total assets.
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.
10
<PAGE>
Prior to making loans other than loans of portfolio securities, the Board of
Trustees will adopt procedures to identify, monitor and control the risks
which would be involved with such lending activities. Specifically, the credit
risk of all counterparties would be evaluated prior to entering into
transactions in an effort to minimize the risk of counterparty default.
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 4 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 4.
PROPOSAL 5. (All Funds)
To approve a change in the investment policies of all 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.
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 5% of the total assets
(including amount borrowed) taken at market value (the Fixed Income Fund and
New York Tax-Free Bond Fund may borrow up to 10% in order to meet redemptions
only). 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 (the International Fund and the Growth and
Income Fund are limited to 5%). 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 Funds' 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 Securities and Exchange Commission ("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 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.
11
<PAGE>
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.
Changing this policy will provide increased investment flexibility and may
provide opportunities to enhance the Funds' performance, with the
corresponding risk which accompanies increased borrowing. While changing the
investment policy will permit each Fund to borrow up to 33 1/3% of its assets,
the Adviser will exercise care, consistent with each 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 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 5 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 5.
PROPOSAL 6. (Growth and Income, Fixed Income and New York Tax-Free Bond Funds)
To approve a change in the investment policies of all of the Funds, except the
International Equity Fund, which does not have such policy, to remove the
restriction on each Fund purchasing securities of any company with a record of
less than three years' continuous operation if such purchase would cause the
Fund's investments in all such companies taken at cost to exceed 5% of such
Fund's the total assets taken at market value.
At the Meeting, Shareholders will be asked to vote to remove the Funds'
fundamental investment policy regarding investments in securities of issuers
which have been in operation for less than three years to 5% of its total
assets. The current policy prohibits each Fund, except the International
Equity Fund, from purchasing the securities of any company with a record of
less than three years' continuous operation if such purchase would cause the
Fund's investments in all such companies taken at cost to exceed 5% of such
Fund's total assets taken at market value.
12
<PAGE>
If this Proposal is adopted, this fundamental investment policy would be
eliminated from the Funds' investment policies and each Fund will be permitted
to invest more than 5% of its total assets in the securities of issuers which
at the time of purchase had been in operation for less than three years.
The primary purpose of this Proposal is to update the Funds' investment
policies in light of recent changes in the law. The Funds' fundamental
policies were originally adopted to be consistent with state securities ("blue
sky") regulations, which placed limits on the amounts of certain types of
securities that a mutual fund could purchase. Recent federal legislation
eliminated state regulatory requirements including the requirement embodied in
these investment policies.
If the Proposal is approved, each Fund will be able to invest more than 5%
of its total assets in newly formed or "unseasoned" issuers. Eliminating this
fundamental policy will conform the Funds' investment policies to the
requirements of current federal law. In addition, eliminating this policy will
provide increased investment flexibility and may provide opportunities to
enhance each Fund's performance, with the corresponding risk which accompanies
investing in unseasoned issuers. While removal of the investment policy will
permit the Funds to invest an unlimited amount of their respective assets in
newly formed or "unseasoned companies," the Adviser will exercise care,
consistent with each Fund's investment objectives and policies, in investing
any of a Fund's assets in such securities.
Elimination of this fundamental policy is not expected to 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 6 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 6.
PROPOSAL 7. (Growth and Income, Fixed Income and New York Tax-Free Bond Funds)
To approve a change in the investment policies of all of the Funds, except the
International Equity Fund, which does not have such policy, to remove the
restriction on each Fund investing in warrants in excess of 5% of the Fund's
net assets, and to remove the restriction on the Fund investing in warrants
which are listed on the New York or American Stock Exchanges in excess of 2%
of the Fund's net assets.
At the Meeting, Shareholders of all of the Funds, except the International
Equity Fund, will vote on removing each Fund's fundamental investment policy
which requires the Fund to limit its investments in warrants to 5% of the
Fund's total assets, provided that within that amount, investments in warrants
which are listed on the New York or American Stock Exchanges shall not exceed
2% of net assets. The current policy prohibits each Fund, except the
International Equity Fund, from investing in warrants if, as a result more
than 5% of the Fund's net assets will be invested in warrants or if as a
result more than 2% of the Fund's net assets will be invested in warrants
listed on the New York or American Stock Exchanges.
Subject to Shareholder approval, this fundamental investment policy would be
eliminated from the investment policies of the Funds.
The primary purpose of this Proposal is to update the Funds' investment
policies in light of recent changes in the law. Each Fund's fundamental policy
was originally adopted to be consistent with state securities ("blue sky")
regulations, which placed limits on the amounts of certain types of securities
that a mutual fund could purchase. Recent federal legislation eliminated state
regulatory requirements including the requirement embodied in these investment
policies. If the Proposal is approved, each Fund will be able to invest more
than 5% of its
13
<PAGE>
total assets in warrants and will be able to invest more than 2% of its total
assets in warrants listed on the New York or American Stock Exchange.
Eliminating this fundamental policy will conform each Fund's investment
policies to the requirements of current federal law. In addition, eliminating
this policy will provide increased investment flexibility and may provide
opportunities to enhance each Fund's performance, with the corresponding risks
which accompany investments in warrants. While removal of the investment
policy will permit each Fund to invest an unlimited amount of its assets in
warrants, it is not anticipated that the level of assets currently invested in
warrants will significantly increase.
Elimination of this fundamental policy is not expected to 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 7 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 7.
PROPOSAL 8. (Growth and Income, Fixed Income and New York Tax-Free Bond Funds)
To approve a change in the investment policies of all of the Funds, except the
International Equity Fund, which does not have such policy, to permit each
Fund to purchase or retain securities of any company which the Officers and
Trustees of the Trust, and Officers and Directors of the Adviser, who
individually own more than 1/2 of 1% of the securities of that company,
together own beneficially more than 5% of such company.
At the Meeting, Shareholders of the Funds will vote on removing each Fund's
fundamental investment policy regarding the Funds purchasing or retaining
securities of issuers which the Officers and Trustees of the Trust, and the
Officers and Directors of the Adviser, who individually own more than 1/2 of
1% of the securities of that company, together own beneficially more than 5%
of such company. The current policy prohibits each Fund from purchasing or
retaining the securities of any company if, to the knowledge of the Fund,
Officers and Trustees of the Trust and Officers and Directors of the Adviser
who individually own more than 1/2 of 1% of the securities of that company
together own beneficially more than 5% of such company.
Subject to Shareholder approval, this fundamental investment policy would be
eliminated from the investment policies of the Funds.
The primary purpose of this Proposal is to update the Funds' investment
policies in light of recent changes in the law. The Funds' fundamental policy
was originally adopted to be consistent with state securities ("blue sky")
regulations, which placed limits on the amounts of certain types of securities
that a mutual fund could purchase. Recent federal legislation eliminated state
regulatory requirements including the requirement embodied in these investment
policies.
This proposal will eliminate the Funds' policy of avoiding investments in
securities issued by companies whose securities are owned in certain amounts
by the Officers and Trustees of the Trust and the Officers and Directors of
the Adviser. Preventing conflicts of interest in fund management is a
critically important objective. However, Fund management believes that the
Funds' Code of Ethics is sufficient to accomplish this objective. The Funds
maintain a Code of Ethics which has been adopted in accordance with SEC rules,
to restrict the private investment activities of the Officers and Trustees of
the Trust and the Officers and Directors of the Adviser. This Code of Ethics
supplements Fund management's separate fiduciary obligation to act with the
Funds' best interests at heart. It places the burden of avoiding potential
conflicts by restricting the ability of the individuals in those key positions
of Officer, Trustee or Director to purchase securities the Funds are invested
in.
14
<PAGE>
Eliminating this fundamental policy will conform the Funds' investment
policies to the requirements of current federal law. In addition, eliminating
this policy will provide increased investment flexibility and may provide
opportunities to enhance the Funds' performance. While removal of this
investment restriction will allow each Fund to purchase securities of a
company which the Trustees and Officers of the Trust and the Officers and
Directors of the Adviser who individually own more than 1/2 of 1% together
have ownership exceeding 5% of the company, the Adviser will exercise care,
consistent with each Fund's investment objectives and policies, in investing
any of a Fund's assets in such securities.
Elimination of this fundamental policy is not expected to 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 8 and recommends that
Shareholders vote to approve Proposal 8.
PROPOSAL 9. (All Funds)
To approve a change in the investment policies of all of the Funds to remove
the restriction on each Fund participating on a joint, or a joint and several,
basis in any securities trading account.
At the Meeting, Shareholders will vote on removing the Funds' investment
policy which prohibits each Fund from participating on a joint, or a joint and
several, basis in any securities trading account.
The 1940 Act currently prohibits investment companies from participating in
certain joint activities. Management believes that the existing 1940 Act
restrictions provide sufficient protection to Shareholders such that the
additional fundamental restrictions are not required.
Most funds which establish joint accounts do so to facilitate the "bulk
purchase" of short-term investments on behalf of the various funds
participating in the account. Generally, funds may earn a higher rate of
return on investments through joint accounts than the rate they could earn
individually because, under most market conditions, it is possible to
negotiate a higher rate of return on larger repurchase agreements and larger
quantities of other short-term investments than the rate available in smaller
transactions. Joint accounts may also increase the number of dealers and
issuers willing to enter into short-term investments with the various funds
participating in the accounts.
Eliminating this fundamental policy will conform each Fund's investment
policies to the requirements of current federal law. In addition, eliminating
this policy will provide increased investment flexibility and may provide
opportunities to enhance each Fund's performance, with the corresponding risks
which accompany participation on a joint, or a joint and several basis in any
securities trading account.
Elimination of this fundamental policy is not expected to 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 9 AND RECOMMENDS THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 9.
15
<PAGE>
PROPOSAL 10. (Growth and Income Fund and New York Tax-Free Bond Fund)
To approve a change in the investment policies of the Growth and Income Fund
and the New York Tax-Free Bond Fund to permit each Fund to invest up to 15% of
its net assets in illiquid securities.
At the Meeting, Shareholders of the Growth and Income and New York Tax-Free
Bond Fund will be asked to vote on amending the Funds' fundamental investment
policy regarding investments in illiquid securities. Currently, these two
Funds are permitted to invest only 10% of their net assets in illiquid
securities, including those securities which do not have readily available
market quotations and repurchase agreements having maturities of more than
seven days. This Proposal would permit each of these two Funds to invest up to
15% of its net assets in illiquid securities.
Illiquid securities are assets which may not be sold or disposed of in the
ordinary course of business within seven days at approximately the value at
which a mutual fund has valued the investment. The SEC historically took the
position that an open-end investment company should limit its investments in
illiquid securities because such securities may present problems of accurate
valuation and because it is possible that the investment company would have
difficulty satisfying redemptions on a timely basis. The SEC and federal rules
now permit all non-money market funds to invest up to 15% of their net assets
in illiquid securities.
The Board of Trustees believes that the current fundamental investment
restriction set forth above is more restrictive than is necessary. In order to
permit maximum flexibility in investing each Fund's assets, the Trustees
recommend that the proposed amendments to the Funds' fundamental restriction
be adopted by shareholders to increase the current limit from 10% to 15% of
the Fund's net assets that may be invested in illiquid securities.
Fund Management has recommended the proposed change to the Trustees because
it believes that the increased flexibility will assist each Fund in achieving
its investment objective.
Eliminating this fundamental policy will conform each Fund's investment
policies to the requirements of current federal law. In addition, eliminating
this policy will provide increased investment flexibility and may provide
opportunities to enhance each Fund's performance, with the corresponding risks
which accompany investments in illiquid securities. If the proposed amendment
is approved, this investment practice could have the effect of increasing the
level of illiquidity of the Funds' portfolio securities. While removal of the
restrictive investment policy will permit each Fund to investment a larger
percentage of their assets in illiquid securities, it is not anticipated that
the level of assets currently invested in illiquid securities will
significantly increase.
Elimination of this fundamental policy is not expected to 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 Funds. 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 10 AND RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE PROPOSAL 10.
PROPOSAL 11. (Growth and Income, Fixed Income and New York Tax-Free Bond
Funds)
To approve a change in the investment policies of all of the Funds, except the
International Equity Fund, to provide that each Fund, with respect to 75% of
its total assets (taken at market value), may not purchase a security if as a
result (1) more than 5% of its total assets (taken at market value) would be
invested in the securities (including securities subject to repurchase
agreements), of any one issuer, other than obligations which are issued or
guaranteed by the United States Government, its agencies or instrumentalities
or (2) the Fund would own more than 10% of the outstanding voting securities
of such issuer.
16
<PAGE>
This proposal would permit the Funds to invest a larger portion of their
assets in fewer issuers, while still meeting the requirement to be diversified
under the 1940 Act. The 1940 Act divides mutual funds into "diversified' and
"non-diversified' investment companies based on a mathematical test that
measures the degree of diversification of a fund's portfolio. The two
components taken into account ("diversification elements") are (i) holding
more than 5% of the fund's assets in a single issuer and (ii) holding more
than 10% of a single issuer's voting securities. In order for a fund to be
considered a "diversified investment company,' the diversification elements
must apply to a minimum of 75% of the Fund's total assets.
Currently, the investment policies of the Growth and Income Fund apply the
diversification elements to 100% of its assets. While the investment policy of
the Fixed Income and New York Tax-Free Bond Funds applies the diversification
elements to 75% of each Fund's assets, the policy then further restricts the
Funds as to the remaining 25% of total assets from purchasing a security if as
a result it would invest more than 10% of its total assets in the securities
of any one issuer or own more than 10% of the outstanding voting securities of
any one issuer.
Under this Proposal, each Fund will have a basket of 25% of its total assets
which will not be subject to the diversification elements. Each Fund will be
permitted to invest up to 25% of its assets in a single issuer, or in a more
likely scenario, invest its 25% basket in a combination of ways (6% of its
assets in four different issuers or 7% in three different issuers).
This Proposal will bring the Funds' investment policies in line with what is
permitted by the 1940 Act. In addition, eliminating this policy will provide
increased investment flexibility and may provide opportunities to enhance the
Funds' performance. Changing this policy will provide increased investment
flexibility and may provide opportunities to enhance the Funds' performance,
with the corresponding risk which accompanies a less diversified portfolio.
While changing this investment policy will make it so that the diversification
elements only apply to 75% of each Fund's total assets, the Adviser will
exercise care, consistent with each Fund's investment objectives and policies,
in investing any of a Fund's assets in a way that exceeds the diversification
elements.
Elimination of this fundamental policy is not expected to 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 11 AND RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE PROPOSAL 11.
17
<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 (with the exception of Mr. Pfann) 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 $4,000 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 $13,960
Wolfe J. Frankl, Trustee $12,830
John P. Pfann, Trustee $ 4,499
Robert A. Robinson, Trustee $13,638
Richard J. Loos, Vice Chairman
Emeritus* $11,027
</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 voting member of the Board.
The following table lists the executive officers of the Trust.
<TABLE>
<CAPTION>
Principal Occupations and Other
Name Position Affiliations 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
Assistant Secretary of 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 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>
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.
18
<PAGE>
HSBC MUTUAL FUNDS TRUST
GROWTH AND INCOME FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints James Smith or Charles Booth, 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 Mutual 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 May 3, 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 DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(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 approve the existing Investment [_] [_] [_]
Advisory Agreement between the Trust APPROVE DISAPPROVE ABSTAIN
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 APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
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 the
Fund's total assets.
<PAGE>
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 purchasing securities
of any company with a record of less
than three years' continuous operation
if such purchase would cause the
fund's investments in all such
companies taken at cost to exceed 5%
of the total assets of the Fund.
7. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on investing in warrants
in excess of 5% of the Fund's net
assets, and to remove the restriction
on the Fund investing in warrants
which are listed on the New York or
American Stock Exchanges in excess of
2% of the Fund's net assets.
8. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to purchase or retain securities of any
company which the officers and trustees
of the trust, and officers and directors
of the adviser, who individually own
more than 1/2 of 1% of the securities
of that company, together own
beneficially more than 5% of such
company.
9. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund's participating
on a joint, or a joint and several
basis, in any securities trading
account.
10. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to invest up to 15% of its net assets
in illiquid securities.
11. To approve a change in the investment [_] [_] [_]
policies of the Fund to provide that APPROVE DISAPPROVE ABSTAIN
the Fund, with respect to 75% of its
total assets (taken at market value),
may not purchase a security if as a
result (1) more than 5% of its total
assets (taken at market value) would
be invested in the securities
(including securities subject to
repurchase agreements), of any one
issuer, other than obligations which
are issued or guaranteed by the
United States Government, its
agencies or instrumentalities or (2)
the Fund would own more than 10% of
the outstanding voting securities of
such issuer.
<PAGE>
HSBC MUTUAL FUNDS TRUST
FIXED INCOME FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints James Smith or Charles Booth, 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 Mutual 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 May 3, 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 DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(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 approve the existing Investment [_] [_] [_]
Advisory Agreement between the Trust and APPROVE DISAPPROVE ABSTAIN
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 APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans, including loan of its
portfolio securities if, as a result,
the aggregate of such loans does not
exceed 33 1/3% of the value of a Fund's
total assets.
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.
<PAGE>
6. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on purchasing securities of
any company with a record of less than
three years' continuous operation if
such purchase would cause the Fund's
investments in all such companies taken
at cost to exceed 5% of the total assets
of the Fund.
7. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on investing in warrants in
excess of 5% of the Fund's net assets,
and to remove the restriction on the
Fund investing in warrants which are
listed on the New York or American Stock
Exchanges in excess of 2% of the Fund's
net assets.
8. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to purchase or retain securities of any
company which the officers and trustees
of the trust, and officers and directors
of the adviser, who individually own more
than 1/2 of 1% of the securities of that
company, together own beneficially more
than 5% of such company.
9. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on participating on a joint,
or a joint and several basis, in any
securities trading account.
11. To approve a change in the investment [_] [_] [_]
policies of the Fund to provide that APPROVE DISAPPROVE ABSTAIN
the Fund, with respect to 75% of its
total assets (taken at market value),
may not purchase a security if as a
result (1) more than 5% of its total
assets (taken at market value) would
be invested in the securities
(including securities subject to
repurchase agreements), of any one
issuer, other than obligations which
are issued or guaranteed by the United
States Government, its agencies or
instrumentalities or (2) the Fund would
own more than 10% of the outstanding
voting securities of such issuer.
<PAGE>
HSBC MUTUAL FUNDS TRUST
NEW YORK TAX-FREE BOND FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints James Smith or Charles Booth, 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 Mutual 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 May 3, 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 DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(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 approve the existing Investment [_] [_] [_]
Advisory Agreement between the Trust and APPROVE DISAPPROVE ABSTAIN
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 APPROVE DISAPPROVE ABSTAIN
Trust for the fiscal year ending
December 31, 1999.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans, including loans of its
portfolio securities ABSTAIN 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.
<PAGE>
6. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on purchasing securities
of any company with a record of less
than three years' continuous operation
if such purchase would cause the
Fund's investments in all such
companies taken at cost to exceed 5% of
the total assets of the Fund.
7. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on investing in warrants in
excess of 5% of the Fund's net assets,
and to remove the restriction on the
Fund investing in warrants which are
listed on the New York or American Stock
Exchanges in excess of 2% of the Fund's
net assets.
8. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to purchase or retain securities of any
company which the officers and trustees
of the trust, and officers and directors
of the adviser, who individually own more
than 1/2 of 1% of the securities of that
company, together own beneficially more
than 5% of such company.
9. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on the Fund participating
on a joint, or a joint and several basis,
in any securities trading account.
10. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to invest up to 15% of its net assets in
illiquid securities.
11. To approve a change in the investment [_] [_] [_]
policies of the Fund to provide that the APPROVE DISAPPROVE ABSTAIN
Fund, with respect to 75% of its total
assets (taken at market value), may not
purchase a security if as a result (1)
more than 5% of its total assets (taken
at market value) would be invested in
the securities (including securities
subject to repurchase agreements), of
any one issuer, other than obligations
which are issued or guaranteed by the
United States Government, its agencies
or instrumentalities or (2) the Fund
would own more than 10% of the
outstanding voting securities of such
issuer.
<PAGE>
HSBC MUTUAL FUNDS TRUST
INTERNATIONAL EQUITY FUND PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned hereby appoints James Smith or Charles Booth, 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 Mutual 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 May 3, 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 DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(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 approve the existing Investment [_] [_] [_]
Advisory Agreement between the Trust APPROVE DISAPPROVE ABSTAIN
and HSBC Asset Management Americas
Inc., the Investment Adviser to the
Funds.
3. To ratify the selection of Ernst & [_] [_] [_]
Young, LLP as independent APPROVE DISAPPROVE ABSTAIN
accountants for the Trust for the
fiscal year ending December
31, 1999.
4. To approve a change in the investment [_] [_] [_]
policies of the Fund to permit the Fund APPROVE DISAPPROVE ABSTAIN
to make loans, including loans of its
portfolio securities if, as a result,
the aggregate of such loans does not
exceed 33 1/3% of the value of a Fund's
total assets.
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.
<PAGE>
9. To approve a change in the investment [_] [_] [_]
policies of the Fund to remove the APPROVE DISAPPROVE ABSTAIN
restriction on participating on a joint,
or a joint and several basis, in any
securities trading account.
<PAGE>
[PASTE-UP LETTERHEAD HERE]
March 26, 1999
Dear Valued Shareholder:
The enclosed proxy materials relate to a Special Meeting of Shareholders of
the HSBC Mutual Funds Trust (the "Trust"), and each series of the Trust, the
Growth and Income Fund, Fixed Income Fund, International Equity Fund and the
New York Tax-Free Bond Fund (each a "Fund" and collectively the "Funds") to be
held on May 10, 1999 at 10:00 a.m., Eastern Standard Time, at the Funds'
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,
Walter 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>
AMENDED AND RESTATED
ADVISORY CONTRACT
HSBC MUTUAL 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 Mutual 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 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, respectively (as those terms are
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
<PAGE>
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, Administrator 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 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 gross negligence
2
<PAGE>
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
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.
3
<PAGE>
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 Mutual Funds Trust
By: _________________________________
Title: President
ACCEPTED:
HSBC Asset Management Americas Inc.
By: _________________________________
Title:
4
<PAGE>
NEW YORK TAX-FREE BOND FUND
A Fund of HSBC Mutual 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 Mutual Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The New York Tax-Free Bond 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 for
determining net asset value per share) of the net assets of the Fund during
the preceding month, at the following annual rates:
<TABLE>
<CAPTION>
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
<S> <C>
Not exceeding $300 million 0.450%
In excess of $300 million but not exceeding $600 million 0.420%
In excess of $600 million but not exceeding $1 billion 0.385%
In excess of $1 billion but not exceeding $1.5 billion 0.350%
In excess of $1.5 billion but not exceeding $2 billion 0.315%
In excess of $2 billion 0.280%
</TABLE>
5
<PAGE>
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 Bond Fund, a Fund
of HSBC Mutual Funds Trust
By: _________________________________
Title:
The foregoing Contract is hereby agreed to as of the date hereof:
HSBC Asset Management Americas Inc.
By: _________________________________
Title:
6
<PAGE>
FIXED INCOME FUND
A FUND OF HSBC MUTUAL 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 Mutual Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The Fixed Income 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 for
determining net asset value per share) of the net assets of the Fund during
the preceding month, at the following annual rates:
<TABLE>
<CAPTION>
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
<S> <C>
Not exceeding $400 million 0.550%
In excess of $400 million but not exceeding $800 million 0.505%
In excess of $800 million but not exceeding $1.2 billion 0.460%
In excess of $1.2 billion but not exceeding $1.6 billion 0.415%
In excess of $1.6 billion but not exceeding $2 billion 0.370%
In excess of $2 billion 0.315%
</TABLE>
7
<PAGE>
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,
Fixed Income Fund, A Fund of HSBC
Mutual Funds Trust
By: _________________________________
Title: ____________________________
The foregoing Contract is hereby agreed to as of the date hereof:
HSBC Asset Management Americas Inc.
By: _________________________________
Title: ____________________________
8
<PAGE>
GROWTH AND INCOME FUND
A FUND OF HSBC MUTUAL 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 Mutual Funds Trust (the
"Trust") and HSBC Asset Management Americas Inc. (the "Adviser") as follows:
The Growth and Income 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 for determining net asset
value per share) of the net assets of the Fund during the preceding month, at
the following annual rates:
<TABLE>
<CAPTION>
Portion of average daily value
of net assets of the Fund Fee Rate
------------------------------ --------
<S> <C>
Not exceeding $400 million 0.550%
In excess of $400 million but not exceeding $800 million 0.505%
In excess of $800 million but not exceeding $1.2 billion 0.460%
In excess of $1.2 billion but not exceeding $1.6 billion 0.415%
In excess of $1.6 billion but not exceeding $2 billion 0.370%
In excess of $2 billion 0.315%
</TABLE>
9
<PAGE>
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,
Growth and Income Fund, A Fund of
HSBC Mutual Funds Trust
By: _________________________________
Title:
The foregoing Contract is hereby agreed to as of the date hereof:
HSBC Asset Management Americas Inc.
By: _________________________________
Title:
10
<PAGE>
INTERNATIONAL EQUITY FUND
A FUND OF HSBC MUTUAL 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 International Equity 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 for
determining net asset value per share) of the net assets of the Fund during
the preceding month, at an annual rate of 0.90% of the Fund's average daily
net assets.
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,
International Equity Fund, A Fund of
Hsbc Mutual Funds Trust
By: _________________________________
Title:
The foregoing Contract is hereby agreed to as of the date hereof:
HSBC Asset Management Americas Inc.
By: _________________________________
Title:
11