<PAGE>
HSBC Mutual Funds Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF HSBC ASSET MANAGEMENT AMERICAS INC. APPEARS HERE]
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International Equity Fund
------------------------------------------------------------------
July 26, 1999
Dear Shareholder:
Executive Summary
- -----------------
The MSCI-EAFE Index/1/ posted another solid if unspectacular quarter, rising
2.5% in US Dollar terms. Returns varied greatly at the local market level.
Japan, Scandinavia and the smaller Asian markets were all firm while the UK,
Belgium, Italy and Switzerland were disappointing. The US Dollar continued to
be strong against all world currencies except those with perceived commodity
price linkage such as the Australian Dollar and Canadian Dollar. Once again, in
total, the Pacific Basin offered considerably more attractive returns than
Europe.
There has been a marked change in the nature and breadth of many markets'
leadership. This had proved to be exceptionally narrow in 1998, so a rebound in
companies with more sensitivity to improving global economic activity is not
surprising. We would expect this trend to continue.
Performance during the 2nd quarter of 1999 was very positive vis-a-vis the
MSCI-EAFE Index. The fund rose 7.7% outstripping the index by over 5%. The
attributes that made up the performance were broadly in-line with those seen
earlier in 1999. Currency selection (sterling currency hedge and strong
Australian Dollar) and Stock Selection (overweight in commodity linked plays)
were both very positive more than offsetting the poor Market Selection (strong
Japan and lackluster UK).
We remain underweight in Japanese equities despite the prospects for economic
recovery stocks remain expensive relative to other global opportunities.
The portfolio is significantly overweight in the `Anglo Saxon' markets of
United Kingdom, Australia and New Zealand. The prospects for the latter two
being boosted by an underweight currency and a recovery in commodities.
When a currency is significantly undervalued we will consider hedging a portion
of the fund's exposure. For defensive purposes this resulted in us hedging a
portion of our sterling exposure. After the currency weakness we have since
removed this.
We hold a substantial position, although less than index, in continental
Europe.
Economics
- ---------
Three months ago this Outlook said that economic growth in Japan "might provide
a nice surprise", but we did not anticipate the 8% in Q1. Comments that Japan
has turned the corner are now commonplace, but Q1 was probably erratic. The
figures show a big price fall (thus boosting real growth in consumption) after
an equally anomalous price rise in Q4. Also, it is clear that the economy is
still dependent on the huge (40% plus) rise in public sector spending. The
boost from the public sector will almost disappear unless parliament agrees to
further
- ------
/1/Morgan Stanley Capital International Europe, Australia and Far East Index
(MSCI-EAFE) is a broad based capitalization weighted unmanaged index that
represents the general performance of over 1,000 companies of the European,
Australian and Far Eastern equity markets.
<PAGE>
spending packages--it probably will, but past experience suggests it will drag
its feet. Japan may have hit bottom, but there is no reason to expect growth
to resume at any reasonable rate. Easy money will continue, further action to
help bank liquidity may be needed, and public debt is high and rising. So,
while inflation is non-existent right now, there is a risk of high inflation
round the corner--the problem is when.
Has the Fed really raised interest rates? There is of course precious little
difference between the old situation (with an up bias) and a 25bp rise and a
neutral bias. Under Mr. Greenspan, the Fed has always been cautious, and the
latest move is in line with that. What may be new is the fact that the Fed
acted only on evidence of over-exuberant growth, because inflation remains as
low as ever, at least on the level of the CPI. Wage growth in the US is 5%,
while productivity is below 2% (both ball-park numbers). This means that
domestically-generated inflation is running at 3% or more, and is just a
matter of time before this shows up in the index. Oil prices are now just a
shade below $20 a barrel, which will push up prices even more. Finally, the 3%
of GNP deficit in the current account shows further potential for prices to
rise, and for the dollar to weaken. We believe the Fed was right--and could
have left out the neutral bias.
Being weak gives the euro a bad press, but its weakness diverts attention from
the main problem, which is whether the cost levels at which the member
currencies were locked in, are workable. The evidence may never be 100% clear,
but there are some worrying signs. Italy has failed to meet its fiscal deficit
target, though not by much. It has also suffered some serious strikes. France
has imposed a shorter working week. Growth in Germany, France and Italy has
slowed, but Spain, Portugal and Ireland are doing well. Last month EU
President-elect Prodi said Italy's public sector deficits might mean it could
fail to stay in the euro. This was not a real threat--intended only to
frighten the children into good behavior--but it does illustrate the fact that
Euroland needs substantial reform if it is to work smoothly, and this looks a
long way off.
Politics
- --------
The big event over the quarter was the NATO intervention in Kosovo. Initially
the results from air strikes alone were indecisive and considerable tension
with Russia and China was engendered in the process. Eventually Serbia backed
down, but winning the peace may not be easy unless the allies' long term aims
in the region are clarified. The effects on financial markets of all this has
been limited, although the euro has suffered some collateral damage.
Recent elections to the European parliament saw a big shift to the right of
centre political parties. The results reflect the unpopularity of some--mainly
leftist--national governments and more parochial concerns (for instance,
British affection for the pound sterling).
Voter turnout was generally low (20% in the UK), which is a problem in itself
as if the EU cannot create representative democratic institutions the EMU
project is, in some ways, flawed.
The second fully democratic elections in South Africa resulted in the expected
big victory for the ANC, now led by Thabo Mbeki after Nelson Mandela's
retirement. However, they just fell short of winning two thirds of the votes
cast which would have been required to make changes to the constitution. Like
most leftist parties in a post-communist world it could prove difficult for
the ANC to reconcile the majority's social expectations with the discipline
required by the markets. In spite of this, South Africa's financial markets
appear, we believe, to be undervalued.
Fixed Income
- ------------
Markets recorded a decline of just over 1% in Q2, as against a small rise in
the prior quarter. They took their lead from the US, which was down by a
similar amount. Yen bonds were weakest, falling 2.5% and giving back much
2
<PAGE>
of their strength in Q1. Over the first half of the year, however, yen bonds
remain the only positive market in local terms. With the dollar firm, dollar
investors again fared badly, returns averaging a negative 3.5% in Q2. Europe
showed the worst figures, with negatives of some 6% in dollars, mainly of
course reflecting the weakness of the euro. In contrast, commodity-related
markets like Australia (up 3% in Q2) and Canada (up 1.5%) continued to do well
and they have had the best dollar returns in the first half of 1999.
Last quarter we opined that the bond boom "is clearly past". That gloomy
prediction remains in place, and has, if anything been reinforced by the
action of the Fed in stating that its policy stance has been set neutral.
After the euphoria this has engendered there must be some scope for
disappointment, for inflation is clearly at a low. We continue to take a
cautious approach, and are careful to underweight clear low-value situations
such as yen bonds.
Currencies
- ----------
The euro was again center-stage, and for the same reason. It fell another 4.5%
against the dollar, making a full 12% decline since the turn of the year. This
is dramatic, but we believe it would be simplistic to label the euro a sick
currency. It has simply retraced the rise that its precursor currencies saw in
the second half of 1998. There was some pre-euro exuberance in that, and in
addition, the economic growth figures turned in by the Euroland countries has
been much more sluggish than expected. In the Q4/Q1 period their GNP only just
avoided slipping into negative territory. There are some signs that european
GNP growth is bottoming, so the euro should also stabilise. Fundamentally, it
has fallen below fair value against the dollar, and of course it runs a big
current account surplus, unlike the US.
Our analysis suggests that most currencies are below fair value versus the
dollar. Only sterling stands out as being moderately expensive, and if UK
interest rates moderate, then sterling should decline. The yen may be
volatile. Japan's surplus means the yen is at risk of a sharp rise--but that
would hit the Japanese economy. Fundamentally, Japan would probably welcome a
weaker yen, and if inflation were to emerge, the yen would almost certainly
fall. At present, the best value remains in Canada, Australia and New Zealand,
although their recent rise has eroded some of their relative value.
Emerging Markets
- ----------------
The MSCI EMF Index/2/ rose by 24.4% during the quarter. China was up 81% in
dollar terms over the period, while Malaysia was up 71%. Both markets
benefited from expectations of improving economic performance--China on the
basis of the government's reflationary spending initiative, and Malaysia on
the back of a rebound from last year's crisis.
This past quarter has seen significant political tension around the world,
both in terms of actual conflict and important elections.
The shooting war between India and Pakistan continued over the Kashmir section
through most of the quarter, although resolution appeared likely by June.
While the prospect of these two nuclear powered neighbours at war was daunting
for the rest of the world, their capital markets seemed unfazed, with a small
gain during the period for India, and a small fall for Pakistan. The end of
air strikes against Serbia had little impact on the markets of emerging
Europe, although Russia's increased diplomatic role may well aid its return to
international capital markets eventually. Tensions in the Middle East
continue, with the outgoing Israeli government bombing far into Lebanese
territory just before leaving office. Although the election and the bombings
have had limited impact on markets thus far, the strong coalition which has
been formed is expected to focus on more conciliatory relations with its Arab
neighbours. Indonesia held its first democratic elections in 30 years during
the quarter. Although the elections
- --------
/2/The MSCI Emerging Markets Free Index (MSCI EMF) is an unmanaged index
generally representative of emerging market securities.
3
<PAGE>
themselves went smoothly, subsequent protests have shown that transition to
democracy will be a slow and difficult process, particularly against the
backdrop of economic crisis that still exists from last year's devaluation.
In all regions economic performance has shown signs of improvement for
emerging markets. In Europe, Russia is beginning to show signs of rebuilding
its economy after last year's difficult devaluation and subsequent crisis.
Asia continues its own rebound, with Korea, Malaysia and Thailand leading the
way. In Latin America, Brazil has performed far better than expected since
January's devaluation, with inflation lower than expected and growth
returning. At the same time in Latin America, Mexico is continuing to show
strong economic performance, aided by strong import demand from the United
States, and the Andean countries are beginning to rebound from their commodity
price led recessions.
Looking forward, the strength and direction of US interest rate movements, and
the performance of the US and Japanese economies will be important
determinants of emerging market performance over the next 6 months. If US
rates do not rise dramatically, and the nascent rebound in the Japanese
economy blossoms, emerging markets can be expected to benefit from the stable
environment. As mentioned previously, many emerging economies are beginning to
turn the corner from the difficulties of 1997 and 1998, and stable demand from
the developed world will only further that process. At the same time, however,
it will be important that a positive external environment does not convince
emerging policy makers that they do not need to make the politically difficult
reforms discussed during the last 18 months. Korea as a case in point where
positive export performance has slowed internal economic reform, potentially
setting the scene for a repeat of 1997's devaluation and crises.
Sincerely
/s/ Clive Gillmore
Clive Gillmore
Regional Research Director, Equities
Delaware International Advisers Ltd.
- --------
The views expressed in this letter reflect those of the portfolio manager
through the end of the period covered by the report as stated on the cover.
The manager's views are subject to change at any time based on the market and
other conditions. Past performance is no guarantee of future results.
4
<PAGE>
[CHART APPEARS HERE]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL EQUITY FUND VS. MSCI-EAFE INDEX
Total Return - Institutional Class Shares Service Class Shares
- ----------------------------------------- ------------------------------
Inception Inception
1 Year (3/1/95) 1 Year 5 Year (4/25/94)
------ --------- ------ ------ ---------
Offering Price(1) N/A N/A (3.21)% 4.29% 3.83%
NAV(2) 1.89% 8.99% 1.89 % 5.37% 4.87%
International International
Equity Equity
Fund-Service Fund-Service
Class Class MSCI-EAFE
(without load) (with load) Index
-------------- ----------- ---------
Apr. 1994 10,000 9,497 10,000
Dec. 1994 9,550 9,069 10,008
Dec. 1995 9,970 9,468 11,164
Dec. 1996 10,600 10,066 11,874
Dec. 1997 10,382 9,860 12,118
Dec. 1998 11,557 10,975 14,582
June 1999 12,796 12,152 15,182
--- --- International Equity Fund-Service Class (without load)
- - - - International Equity Fund-Service Class (with load)
------- MSCI-EAFE Index
Past performance is not predictive of future performance. Without certain fee
waivers, the return would have been lower. The Fund's investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than the original cost.
(1) Includes the maximum sales charge of 5.00%
(2) Excludes the maximum sales charge of 5.00%
The above illustration compares a $10,000 investment in the Service Class
Shares of the International Equity Fund on April 25, 1994 (date of inception)
to a $10,000 investment in the Morgan Stanley Capital International Europe,
Australia and Far East (MSCI-EAFE) Index on that date. All dividends and
capital gain distributions are reinvested. Please refer to the box above for
returns on Institutional Class Shares, which have been offered since March 1,
1995.
The Fund's performance takes into account all applicable fees and expenses.
The Morgan Stanley Capital International Europe, Australia and Far East Index
(MSCI-EAFE) is a broad based capitalization weighted unmanaged index that
represents the general performance of over 1,000 companies of the European,
Australian and Far Eastern equity markets. This index is widely accepted and
does not take into account charges, fees and other expenses.
International investing involves increased risks and volatility.
5
<PAGE>
Board of Trustees
WOLF J. FRANKL Former Director, North America, Berlin Economic
Development Corporation
JEFFREY J. HASS President of Law, New York Law School
RICHARD J. LOOS Vice Chairman Emeritus
CLIFTON H.W. MALONEY President, C.H.W. Maloney & Co. Incorporated
JOHN C. MEDITZ President, Horizon Asset Management, Inc.
HARALD PAUMGARTEN President, Paumgarten and Company
JOHN P. PFANN Chairman and President, JPP Equities, Inc.
ROBERT A. ROBINSON Trustee, Henrietta and B. Frederick H. Bugher
Foundation
- --------------------------------------------------------------------------------
Officers
WALTER B. GRIMM President
ERIC F. ALMQUIST Senior Vice President
ANTHONY J. FISCHER Vice President
CHARLES L. BOOTH Vice President
JOEL B. ENGLE Treasurer
STEVEN R. HOWARD Secretary
ALAINA V. METZ Assistant Secretary
ROBERT L. TUCH Assistant Secretary
6
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited)
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Country/ Percent of
Industry Shares Security Market Value Net Assets
- -------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
EQUITIES
AUSTRALIA
---------
Banking 105,550 National Australia Bank
Ltd.................... $ 1,746,646 2.9%
----------- -----
Brewery 631,000 Fosters Brewing Group... 1,778,450 3.0
----------- -----
Building Materials 498,500 CSR Ltd................. 1,425,461 2.4
----------- -----
Industrial Goods &
Services 273,000 Amcor Ltd............... 1,517,556 2.5
118,000 Orica Ltd............... 644,459 1.1
----------- -----
2,162,015 3.6
----------- -----
Total Australia......... 7,112,572 11.9
----------- -----
FRANCE
------
Banking 7,000 Societe Generale........ 1,233,712 2.1
----------- -----
Industrial Goods &
Services 7,268 Compagnie de Saint
Gobain................. 1,158,023 1.9
----------- -----
Oil & Gas Exploration,
Production, & Services 7,900 Elf Aquitane SA......... 1,159,327 1.9
----------- -----
Telecommunication -
Services & Equipment 10,500 Alcatel Alsthom......... 1,478,073 2.5
----------- -----
Total France............ 5,029,135 8.4
----------- -----
GERMANY
-------
Banking 15,893 Bayerische Vereinsbank
AG..................... 1,032,572 1.7
----------- -----
Chemicals 49,000 Bayer AG................ 2,041,509 3.5
----------- -----
Industrial Goods &
Services 23,650 Siemens AG.............. 1,824,343 3.0
----------- -----
Oil Co. - Integrated 22,600 RWE AG.................. 1,046,241 1.7
----------- -----
Total Germany........... 5,944,665 9.9
----------- -----
HONG KONG
---------
Diversified 507,000 Wharf Holdings.......... 1,581,391 2.7
----------- -----
Electric Utility 265,000 Hong Kong Electric
Holdings............... 853,890 1.4
----------- -----
Total Hong Kong......... 2,435,281 4.1
----------- -----
</TABLE>
7
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited) (continued)
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Country/ Percent of
Industry Shares Security Market Value Net Assets
- -------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
EQUITIES (continued)
JAPAN
-----
Electrical & Electronics 257,000 Hitachi Ltd............. $ 2,409,983
68,000 Matsushita Electric
Industrial Co.......... 1,320,267
----------- ----
3,730,250 6.1%
----------- ----
Insurance 65,000 Nichido Fire & Marine
Insurance Company,
Ltd.................... 334,569 0.6
----------- ----
Office Equipment &
Supplies 60,000 Canon Inc............... 1,725,104 2.9
----------- ----
Pharmaceuticals 66,000 Eisai Company, Ltd...... 1,300,520 2.2
----------- ----
Transportation 360 West Japan Railway Co... 1,380,083 2.3
----------- ----
Total Japan............. 8,470,526 14.1
----------- ----
NETHERLANDS
-----------
Banking 28,549 ING Groep NV............ 1,527,775 2.5
----------- ----
Broadcasting &
Publishing 84,400 Elsevier................ 979,194 1.6
----------- ----
Oil Co. - Integrated 29,799 Royal Dutch Petroleum
Co..................... 1,745,516 3.0
----------- ----
Total Netherlands....... 4,252,485 7.1
----------- ----
NEW ZEALAND
-----------
Paper & Related Products 487,000 Carter Holt Harvey
Ltd.................... 583,241 1.0
----------- ----
Telecommunications 310,000 Telecom Corp of New
Zealand Ltd............ 1,330,629 2.2
----------- ----
Total New Zealand....... 1,913,870 3.2
----------- ----
SINGAPORE
---------
Retail 151,000 Jardine Matheson
Holdings Ltd........... 755,000 1.3
----------- ----
SOUTH AFRICA
------------
Insurance 182,226 Sanlam Limited (b)...... 107,230 0.2
----------- ----
Oil & Gas Exploration,
Production, & Services 44,000 Sar Sasol Limited....... 263,673 0.4
----------- ----
Total South Africa...... 370,903 0.6
----------- ----
</TABLE>
8
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited) (continued)
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Country/ Percent of
Industry Shares Security Market Value Net Assets
- -------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
EQUITIES (continued)
SPAIN
-----
Banking 122,028 Banco Central
Hispanoamer............ $ 1,271,027 2.1%
----------- -----
Electrical & Electronics 74,000 Iberdrola SA............ 1,127,161 1.9
----------- -----
Telecommunications 33,745 Telefonica SA........... 1,625,523 2.7
----------- -----
Total Spain............. 4,023,711 6.7
----------- -----
UNITED KINGDOM
--------------
Brewery 113,600 Bass PLC................ 1,651,899 2.8
----------- -----
Building Products 244,600 Blue Circle Industries
PLC.................... 1,628,040
426,300 Taylor Woodrow PLC...... 1,229,717
----------- -----
2,857,757 4.7
----------- -----
Electric Utility 78,500 PowerGen PLC............ 844,522 1.4
----------- -----
Food Products & Services 108,944 Associated British Foods
PLC.................... 711,385 1.2
----------- -----
Health & Personal Care 109,400 Boots Co. PLC........... 1,305,425
62,723 Glaxo Holdings PLC...... 1,742,095
----------- -----
3,047,520 5.0
----------- -----
Machinery & Equipment 114,200 GKN PLC................. 1,954,946 3.2
----------- -----
Metals & Mining 85,500 Rio Tinto PLC........... 1,423,210 2.4
----------- -----
Oil & Gas - Wholesale 229,300 BG PLC.................. 1,403,313 2.3
----------- -----
Telecommunications 144,600 Cable & Wireless PLC.... 1,840,559 3.1
----------- -----
Transportation 181,000 British Airways PLC..... 1,244,666 2.1
----------- -----
Total United Kingdom.... 16,979,777 28.2
----------- -----
Total Equities.......... 57,287,925 95.5
----------- -----
(Cost-$48,549,596)
</TABLE>
9
<PAGE>
Schedule of Portfolio Investments as of June 30, 1999 (Unaudited) (continued)
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Percent of
Security Market Value Net Assets
- ---------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
Total Investments (Cost-
$48,549,596) (a)....... $57,287,925 95.5%
----------- -----
Other Assets in Excess
of Liabilities......... 2,684,084 4.5
----------- -----
Total Net Assets........ $59,972,009 100.0%
=========== =====
</TABLE>
- --------
Percentages indicated are based on net assets of $59,972,009.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $11,158,936
Unrealized depreciation......................................... (2,420,607)
-----------
Net unrealized appreciation..................................... $ 8,738,329
===========
</TABLE>
(b) Represents non-income producing security.
AG--Aktiengesellschaft (German stock company)
NV--Naamloze Vennootschap (Dutch corporation)
PLC--Public Limited Company
SA--Societe Anonyme (French corporation)
See notes to financial statements.
10
<PAGE>
Statement of Assets and Liabilities
As of June 30, 1999 (Unaudited)
INTERNATIONAL EQUITY FUND
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost-$48,549,596)........... $57,287,925
Cash denominated in foreign currencies (cost-$81,412)............ 81,528
Cash............................................................. 1,599,854
Interest and dividends receivable................................ 225,575
Foreign tax reclaims receivable.................................. 98,820
Unrealized appreciation on forward foreign currency exchange
contracts....................................................... 114,289
Prepaid expenses................................................. 3,132
-----------
Total Assets.................................................... 59,411,123
-----------
LIABILITIES:
Securities purchased payable..................................... 101,806
Accrued expenses and other payables:
Investment advisory fee......................................... 27,566
Administration fee.............................................. 4,837
Accounting and transfer agent fees.............................. 19,083
Other........................................................... 119,899
-----------
Total Liabilities............................................... 273,191
-----------
Net Assets........................................................ $59,137,932
===========
COMPUTATION OF NET ASSET VALUE:
Net Assets:
Institutional Class............................................. $58,890,538
Service Class................................................... 247,394
-----------
Total........................................................... $59,137,932
===========
Shares of beneficial interest issued and outstanding:
($0.001 par value per share, unlimited number of shares
authorized)
Institutional Class............................................. 4,673,503
Service Class................................................... 19,635
-----------
Total........................................................... 4,693,138
===========
Net Asset Value:
Institutional Class--offering and redemption price per share.... $ 12.60
===========
Service Class--redemption price per share....................... $ 12.60
Maximum sales charge............................................ 5.00%
Maximum offering price (Service Class) (Net asset value
of Service Class / (100% - Maximum Sales Charge)).............. $ 13.26
===========
COMPOSITION OF NET ASSETS:
Paid-in capital.................................................. $45,843,182
Undistributed net investment income.............................. 565,741
Accumulated undistributed net realized gains
from investment and foreign currency transactions............... 3,874,219
Net unrealized appreciation from investments and translation
of assets and liabilities denominated in foreign currencies..... 8,854,790
-----------
Net Assets........................................................ $59,137,932
===========
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Statement of Operations
For the period ended June 30, 1999 (Unaudited)
INTERNATIONAL EQUITY FUND
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $58,404)............ $1,000,777
----------
Total Income.................................................... 1,000,777
----------
EXPENSES:
Investment advisory fees......................................... 283,765
Administration fees.............................................. 47,294
Co-administration fees........................................... 9,459
Shareholder servicing assistance fees (Service shares)........... 49
Distribution fees (Service shares)............................... 429
Accounting fees.................................................. 3,249
Legal fees....................................................... 63,204
Printing costs................................................... 34,464
Transfer agent fees.............................................. 15,834
Other expenses................................................... 42,122
----------
Gross Expenses.................................................... 499,869
Less: Fee waivers................................................ (133,761)
----------
Net Expenses...................................................... 366,108
----------
Net Investment Income............................................. 634,669
----------
NET REALIZED/UNREALIZED GAINS FROM INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains from investment and foreign currency
transactions..................................................... 4,245,026
Net change in unrealized appreciation from investments............ 1,819,864
----------
Net Realized/Unrealized Gains from Investments and Foreign
Currencies....................................................... 6,064,890
----------
Change in Net Assets Resulting from Operations.................... $6,699,559
==========
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Statement of Changes in Net Assets (Unaudited)
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
For the For the
Period ended Year ended
June 30, 1999 December 31,1998
------------- ----------------
<S> <C> <C>
From Investment Activities:
OPERATIONS:
Net investment income.......................... $ 634,669 $ 531,914
Net realized gains from investment and foreign
currency transactions......................... 4,245,026 1,450,203
Net change in unrealized appreciation from
investments................................... 1,819,864 3,340,139
------------ -----------
Change in net assets resulting from
operations.................................... 6,699,559 5,322,256
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Institutional Class
From net investment income.................... -- (529,501)
In excess of net investment income............ -- (72,469)
From net realized gains (losses) from
investment transactions...................... -- (239,229)
Service Class
From net investment income.................... -- (2,400)
From net realized gains (losses) from
investment transactions...................... -- (951)
------------ -----------
Change in net assets from shareholder
distributions................................. -- (844,550)
------------ -----------
Change in net assets from capital share
transactions.................................. (12,959,289) (6,847,414)
------------ -----------
Change in Net Assets........................... (6,259,730) (2,369,708)
------------ -----------
NET ASSETS:
Beginning of period............................ 65,397,662 67,767,370
------------ -----------
End of period.................................. $ 59,137,932 $65,397,662
============ ===========
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Notes to Financial Statements
1.Organization
HSBC Mutual Funds Trust (the "Trust") was organized in Massachusetts on
November 1, 1989 as a Massachusetts business trust, and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as a
diversified, open-end management investment company with multiple
investment portfolios. The accompanying financial statements and notes
relate only to the International Equity Fund ("the Fund"). The Fund offers
two classes of shares: Institutional Shares and Service Shares. The
Institutional Class is available to customers of financial institutions or
corporations on behalf of their customers or employees, or on behalf of any
trust, pension, profit-sharing or other benefit plan for such customers or
employees. The Service Class is available to all other investors. The
Institutional Class shares and Service Class shares are identical in all
respects except that Institutional Class Shares are not subject to a sales
load or the imposition of any shareholder servicing fees or Rule 12b-1
fees.
The Fund's investment objective is to seek to provide investors with long-
term capital appreciation by investing at least 65% of its total assets in
equity securities (including American and European Depositary Receipts)
issued by companies based outside of the United States. The balance of the
Fund's assets will be invested in equity and debt securities of companies
based in the United States and outside of the United States including bonds
and money market instruments. The Fund may also use other investment
practices to enhance return or to hedge against fluctuations in the value
of portfolio securities.
2.Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of income
and expenses for the period. Actual results could differ from those
estimates.
Securities Valuation: Investments in securities are valued at the last
quoted sale price as of the close of business on the day the valuation is
made, or if a sale is not reported for that day, at the mean between
closing bid and asked prices. Price information for listed securities is
taken from the exchange where the securities are primarily traded.
Investments in futures and related options, which are traded on commodities
exchanges, are valued at their last sale price as of the close of such
exchanges. Other securities for which no quotations are readily available
are valued at fair value as determined in good faith by or under the
direction of the Board of Trustees. Short-term investments having
maturities of 60 days or less are valued at amortized cost, which
approximates market value.
All assets and liabilities initially expressed in foreign currencies are
translated into U.S. dollars at the bid price of such currencies against
the U.S. dollar's last quoted price by a major bank or broker. If such
quotations are not available as of the close of the New York Stock
Exchange, the rate of exchange will be determined in accordance with
policies established in good faith by the Board of Trustees.
Foreign Currencies: Transactions denominated in foreign currencies are
recorded at the prevailing rate of exchange as incurred or earned. Asset
and liability accounts are adjusted to reflect the current rate at the end
of each period. Such adjustments are recorded in "net unrealized
appreciation from investments and translation of assets and liabilities
denominated in foreign currencies". Net realized foreign currency gains or
losses include
14
<PAGE>
Notes to Financial Statements (continued)
2.Significant Accounting Policies (continued)
exchange rate differences between trade date and settlement date for
security purchases and sales, and between the date the Fund records income,
expenses and other assets and liabilities and the date such assets and
liabilities are received or paid. The portion of both realized and
unrealized gains and losses on investments that result from fluctuations in
foreign currency exchange rates is not separately disclosed.
The Fund may enter into forward foreign currency exchange contracts for
investment purposes and to hedge its exposure to changes in foreign
currency exchange rates on its foreign portfolio holdings and to hedge
certain firm purchase and sales commitments denominated in foreign
currencies. A forward foreign currency exchange contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated rate.
The gain or loss arising from the difference between the original contracts
and the closing of such contracts is included in realized gains or losses
from foreign currency transactions. Fluctuations in the value of forward
foreign currency exchange contracts are recorded for financial reporting
purposes as unrealized gains or losses by the Fund until settlement date.
The Fund's custodian will place cash or liquid high grade debt securities
into a segregated account of the Fund in an amount equal to the value of
the Fund's total assets committed to the consummation of forward foreign
exchange contracts requiring the Fund to purchase foreign currency of
foreign exchange contracts entered into for non-hedging purposes. If the
value of the securities placed in the segregated account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. The face or contract amount,
in U.S. dollars reflects the total exposure the Fund has in that particular
currency contract. The Fund had the following outstanding forward foreign
currency exchange contracts as of June 30, 1999:
<TABLE>
<CAPTION>
Foreign Currency Settlement Contracted Current Unrealized
Contracts Date Amount Proceeds Value Appreciation/(Depreciation)
---------------- ---------- ----------------- ---------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C>
Sales Contracts:
British Pound 7/30/99 (Pounds)3,371,905 $5,455,000 $5,315,133 $139,867
Buy Contracts:
British Pound 7/30/99 3,063,586 4,840,711 4,829,131 (11,580)
British Pound 7/30/99 308,318 500,000 486,002 (13,998)
--------
Total: $114,289
========
</TABLE>
Taxes: It is the Fund's policy to continue to comply with the requirements
of the Internal Revenue Code, as amended, applicable to regulated
investment companies, and to distribute substantially all of its taxable
income, and net realized capital gains, if any, to its shareholders.
Therefore, no provision is required for federal income tax. Under the
applicable foreign tax law, a withholding tax may be imposed on interest,
dividends and capital gains earned on foreign investments at various rates.
Where available, the Fund will file for claims on foreign taxes withheld.
Dividends and Distributions: The Fund intends to declare and pay
substantially all of its net investment income and net realized capital
gains, if any, annually in the form of dividends.
15
<PAGE>
Notes to Financial Statements (continued)
2.Significant Accounting Policies (continued)
Dividends and distributions are recorded by the Fund on the ex-dividend
date. The amounts of dividends from net investment income and of
distributions from net realized gains are determined in accordance with
federal income tax regulations that may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the composition
of net assets based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions to
shareholders which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions
in excess of net realized gains. To the extent they exceed net investment
income and net realized gains for tax purposes, they are reported as
distributions of capital.
Security Transactions and Related Income: Security transactions are
recorded on trade date. Identified cost of investments sold is used for
both financial statement and federal income tax purposes. Dividend income
is recorded on the ex-dividend date. Interest income is recorded as earned.
Expense Allocation: Expenses directly attributed to each Fund in the Trust
are charged to that Fund's operations; expenses which are applicable to all
Funds are allocated among them on the basis of relative net assets or
another appropriate basis.
3.Portfolio Securities
Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 1999 were $1,233,698 and $15,483,906, respectively.
4.Related Party Transactions
The Trust retains HSBC Asset Management Americas Inc. to act as Investment
Adviser for the Fund. HSBC Asset Management Americas Inc. is the North
American investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai
Banking Corporation). As Investment Adviser, HSBC Asset Management Americas
Inc. furnishes investment guidance and policy direction in connection with
the management of the portfolio of the Fund, subject to policies
established by the Board of Trustees. As compensation for its services,
HSBC Asset Management Americas Inc. is paid a monthly advisory fee at an
annual rate of 0.90% of the Fund's average daily net assets. For the period
ended June 30, 1999, HSBC Asset Management Americas Inc. waived $108,059 in
advisory fees.
HSBC Asset Management America, Inc. appointed Delaware International
Advisers Ltd. to act as investment sub-adviser pursuant to a Subadvisory
Agreement. Under the Subadvisory Agreement, the Subadviser has sole
discretion, bonded by the investment policies and restrictions of the Fund
as are set forth in the Fund's prospectus, with respect to investments of
assets in the Fund. The Subadviser receives compensation from the
Investment Adviser equal to an amount based on certain percentages of the
Fund's average daily net assets.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS"), an Ohio limited partnership is a subsidiary of The BISYS Group,
Inc. BISYS, with whom certain officers of the Trust are affiliated, serves
the Trust as distributor, administrator, fund accountant and transfer
agent. Such officers are not paid any fees directly by the Fund for serving
as officers of the Trust.
16
<PAGE>
Notes to Financial Statements (continued)
In accordance with the terms of the Management and Administration and Fund
Accounting Agreements, BISYS is paid a monthly fee equal to an annual rate
of 0.15% of the Fund's average daily net assets. For the period ended June
30, 1999, BISYS waived $15,765 in administrative services fees.
HSBC Asset Management Americas Inc. earned co-administration and
shareholder servicer assistance fees of up to 0.07% of the Fund's average
net assets totaling $9,508 from the Fund for the period ended June 30,
1999, all of which was waived.
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the 1940 Act with respect to Service Shares of
the Fund. The Service Class Plan provides for a monthly payment by the Fund
to BISYS for expenses incurred in connection with distribution services
provided to the Fund not to exceed an annual rate of 0.35% of the Fund's
average net assets. The Fund incurred expenses totaling $429 with regard to
the Plan for the period ended June 30, 1999, all of which was waived. As
distributor, BISYS is entitled to receive commissions on sales of shares of
the Fund. For the period ended June 30, 1999, BISYS received $15 from
commissions earned on sales of shares of the Fund, $13 of which was
reallowed to affiliated broker/dealers of the Fund, $2 of which was
retained by BISYS.
The Fund may enter into agreements (the "Service Agreements") with certain
banks, financial institutions and corporations ("Service Organizations")
whereby each Service Organization handles recordkeeping and provides
certain administration services for its customers who invest in the Fund
through accounts maintained at that Service Organization. Each Service
Organization will receive monthly payments for the performance of its
service under the Service Agreement. The payments from the Fund on an
annual basis will not exceed 0.35% of the average value of the Funds'
shares held in the subaccounts of the Service Organizations. For the period
ended June 30, 1999, the Fund did not participate in any Service
Agreements.
A partner of the Trust's legal counsel served as Secretary of the Trust.
Paul, Weiss, Rifkind, Wharton and Garrison served as the Trust's legal
counsel for the period ended June 30, 1999.
5.Capital Share Transactions
Transactions in capital shares for the were as follows:
<TABLE>
<CAPTION>
For the period ended For the year ended
June 30, 1999 December 31, 1998
------------------------ ------------------------
Amount Shares Amount Shares
------------ ---------- ------------ ----------
Institutional Class Shares:
<S> <C> <C> <C> <C>
Shares issued $ 2,435,769 212,360 $ 20,085,592 1,642,226
Shares reinvested -- -- 239,264 20,933
Shares redeemed (15,359,580) (1,261,296) (27,092,926) (2,460,775)
------------ ---------- ------------ ----------
Net (decrease) $(12,923,811) (1,048,936) $ (6,768,070) (797,616)
============ ========== ============ ==========
Service Class Shares:
Shares issued $ 435 37 $ 3,560 333
Shares reinvested -- -- 4,310 377
Shares redeemed (35,913) (3,156) (87,214) (7,824)
------------ ---------- ------------ ----------
Net decrease $ (35,478) (3,119) $ (79,344) (7,114)
============ ========== ============ ==========
</TABLE>
17
<PAGE>
Notes to Financial Statements (continued)
6.Voting Results of Special Meeting of Shareholders
At a special meeting of the shareholders of HSBC Mutual Fund Trust (the
"Trust"), held on May 10, 1999, at 10:00 a.m. ET, the following actions
were taken:
(1) The approval of the election of four existing members of the Board of
Trustees of the Trust and the election of four new members to the Board
of Trustees of the Trust to serve until their successors are duly
elected and qualified as presented in the proxy materials:
<TABLE>
<CAPTION>
Number of Number of
Name of Trustee Votes For Votes Withheld
--------------- --------- --------------
<S> <C> <C>
Wolfe J. Frankl................................... 4,970,246 10,018
Jeffery J. Hass................................... 4,970,246 10,018
Richard J. Loos................................... 4,970,246 10,018
Clifton H. W. Maloney............................. 4,970,246 10,018
John C. Meditz.................................... 4,970,246 10,018
Harald Paumgarten................................. 4,970,246 10,018
John P. Pfann..................................... 4,970,246 10,018
Robert A. Robinson................................ 4,970,246 10,018
</TABLE>
(2) The approval of the existing Investment Advisory agreement between the
Trust and HSBC Asset Management Americas Inc. is as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
International Equity Fund........................ 4,127,861 413,000 439,402
</TABLE>
(3) The approval that Ernst & Young, LLP has been selected as independent
accountants for the Trust for the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
HSBC Mutual Funds Trust.......................... 4,972,541 -- 7,723
</TABLE>
(4) The approval that a change in the investment policies of the Funds to
permit the Funds to make loans, including loans of its portfolio
securities if, as a result, the aggregate of such loans does not exceed
33 1/3% of the value of a Fund's total assets:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
International Equity Fund........................ 4,949,009 11,137 20,118
</TABLE>
18
<PAGE>
Notes to Financial Statements (continued)
6.Voting Results of Special Meeting of Shareholders (continued)
(5) The approval that a change in the investment policies of the Funds to
permit the Funds to: (I) borrow from banks, for any purpose, up to 33
1/3% of the current value of its total assets; (II) pledge up to 33
1/3% of its total assets to secure such borrowings; and (III) to
eliminate any limits on purchasing securities when borrowings exist:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
International Equity Fund........................ 4,944,680 11,425 24,159
</TABLE>
(6) The approval that a change in the investment policies of the Fund to
remove the restriction on the Fund participating on a joint, or a joint
and several basis, in any securities trading account:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
International Equity Fund........................ 4,944,693 10,535 25,036
</TABLE>
7.Subsequent Events
Effective July 1, 1999, the International Equity Fund was authorized to
issue two additional classes of shares: Class B and Class C shares. Also
effective July 1, 1999, the existing Service class is designated as Class A
shares. Each class of shares in a Fund has substantially identical rights
and privileges except with respect to sales charges, fees paid under
service organization or distribution plans, expenses allocable exclusively
to each class of shares, voting rights on matters affecting a single class
of shares, and the exchange privileges of each class of shares.
The following is a summary of the maximum annual fund operating expenses
(fees paid from Fund assets) for Class A, Class B and Class C shares
effective July 1, 1999:
<TABLE>
<CAPTION>
Equity Fund
-------------------------------------------
Class A Class B Class C Institutional Class
------- ------- ------- -------------------
<S> <C> <C> <C> <C>
Management fee/1/ ............. 0.90% 0.90% 0.90% 0.90%
Administrative Services
fee/2/ ....................... 0.15% 0.15% 0.15% 0.15%
Distribution (12b-1) fee/3/ ... 0.35% 0.75% 0.75% None
Service Organization fee/4/ ... 0.35% 0.50% 0.50% None
Other expenses................. 0.53% 0.53% 0.53% 0.53%
Fee Waivers & Expense
Reimbursements................ 0.85% 0.65% 0.65% 0.40%
Net expenses................... 1.43% 2.18% 2.18% 1.18%
</TABLE>
/1/The Advisor is contractually limiting its Management fee to .55% for
each class of shares until December 31, 1999.
/2/The Administrator is contractually limiting its Administrative Services
fee to .10% for each class of shares until December 31, 1999.
/3/The Distributor is contractually waiving .10% of its Distribution fee
for Class A shares until December 31, 1999.
/4/The Service Organization fee is being contractually waived in its
entirety for Class A shares and contractually limited to .25% for Class
B and Class C shares until December 31, 1999.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Each Year and
Periods Indicated.
(Unaudited)
HSBC INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Institutional Class Shares
----------------------------------------------------------------------------------------
For the For the For the For the For the Period
Period ended Year ended Year ended Year ended March 1, 1995(c) to
June 30, 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995
------------- ----------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 11.38 $ 10.35 $ 10.61 $ 9.98 $ 8.81
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.12** 0.08 0.04** (0.01) (0.03)
Net realized and
unrealized gains
from investment and
foreign
currency
transactions.......... 1.10 1.09 (0.27) 0.64 1.20
------- ------- ------- ------- -------
Total from Investment
Activities............ 1.22 1.17 (0.23) 0.63 1.17
------- ------- ------- ------- -------
Distributions
From net investment
income................ -- (0.08) (0.02) -- --
In excess of net
investment income..... -- (0.02) (0.01) -- --
From net realized
gains................. -- (0.04) -- -- --
------- ------- ------- ------- -------
Total Distributions..... -- (0.14) (0.03) -- --
------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 12.60 $ 11.38 $ 10.35 $ 10.61 $ 9.98
======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 10.72%(a) 11.32% (2.15)% 6.31% 13.28%(a)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $58,891 $65,139 $67,458 $21,110 $15,253
Ratio of expenses to
average net assets.... 1.16%(c) 1.14% 1.12% 2.04% 2.62%(b)
Ratio of net investment
income to average net
assets................ 2.01%(b) 0.81% 0.35% (0.10)% (0.34)%(b)
Ratio of expenses to
average net assets*... 1.58%(b) 1.61% 1.91% 2.89% 3.12%(b)
Portfolio turnover
rate***............... 2.03%(a) 163.90% 112.54% 77.91% 90.31%(a)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Based on average shares outstanding.
*** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Commencement of operations.
20
<PAGE>
<TABLE>
<CAPTION>
Service Class Shares
- -----------------------------------------------------------------------------------------------------------
For the For the For the For the For the For the Period
Period ended Year ended Year ended Year ended Year ended April 25, 1994(c) to
June 30, 1999 December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1994
- ------------- ----------------- ----------------- ----------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
$11.38 $ 10.35 $10.60 $ 9.97 $ 9.55 $ 10.00
------ ------- ------ ------ ------ -------
0.12** 0.08 0.06** (0.02) (0.07) --
1.10 1.09 (0.28) 0.65 0.49 (0.43)
------ ------- ------ ------ ------ -------
1.22 1.17 (0.22) 0.63 0.42 (0.43)
------ ------- ------ ------ ------ -------
-- (0.10) (0.03) -- -- --
-- -- -- -- -- (0.02)
-- (0.04) -- -- -- --
------ ------- ------ ------ ------ -------
-- (0.14) (0.03) -- -- (0.02)
------ ------- ------ ------ ------ -------
$12.60 $ 11.38 $10.35 $10.60 $ 9.97 $ 9.55
====== ======= ====== ====== ====== =======
10.72%(a) 11.32% (2.06)% 6.32% 4.40% (4.30)%(a)
$ 247 $ 259 $ 309 $ 409 $ 658 $16,819
1.16%(b) 1.12% 1.17% 2.10% 1.96% 2.16%(b)
2.01%(b) 0.81% 0.54% (0.19)% (1.01)% (0.04)%(b)
1.97%(b) 1.94% 2.19% 2.94% 3.66% 2.50%(b)
2.03%(a) 163.90% 112.54% 77.91% 90.31% 29.37%(a)
</TABLE>
21
<PAGE>
HSBC Mutual Funds Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF HSBC ASSET MANAGEMENT
AMERICAS INC. APPEARS HERE]
- --------------------------------------------------------------------------------
International Equity Fund
HSBC SM Mutual Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
Information:
(800) 634-2536
Investment Adviser
HSBC Asset Management Americas Inc.
140 Broadway (6th Floor)
New York, New York 10005-1180
Distributor, Administrator, Transfer Agent
and Dividend Disbursing Agent
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
Legal Counsel
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
This report is for the information of the shareholders of HSBC Mutual Funds
Trust. Its use in connection with any offering of the Trust's shares is
authorized only in the case of a concurrent or prior delivery of the Trust's
current prospectus. Shares of the Fund are not an obligation of or guaranteed
or endorsed by HSBC Holdings plc or its affiliates. In addition, such shares
are not insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency and may involve investment risks, including
the possible loss of principal.
8/99
Semi-Annual Report (Unaudited)
June 30, 1999
Managed by:
HSBC Asset Management Americas Inc.
Sponsored and distributed by:
BISYS Fund Services
