<PAGE>
HSBC Mutual Funds Trust
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HSBC Asset Management Americas Inc.
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Growth and Income Fund
------------------------------------------------------------------
Portfolio Review
July 18, 2000
Dear Shareholder:
The United States equity market, as measured by the Standard & Poor's 500/1/
(the "S&P 500"), declined 0.42% during the first six months of 2000. The modest
decline masked some of the most volatile trading seen in several years, as
investors became concerned about aggressive Federal Reserve (the "Fed")
tightening. The Fed did in fact raise the Federal Funds rate on three separate
occasions for a total of 100 basis points during the first half of 2000. After
trending lower for most of the first quarter, stocks turned dramatically higher
in mid-March and reached new highs before retreating. After reaching an all-
time high on March 24, the S&P 500 declined by 12% within three weeks. The
NASDAQ Composite Index/2/ (the "NASDAQ"), which declined 2.46% during the six-
month period ended June 30, 2000, is a prime example of the volatility
experienced by investors. During the first quarter, the NASDAQ suffered through
three separate corrections of 10% or more, yet registered a stunning 12.4% gain
for the quarter. The NASDAQ reached an all-time high on March 10, then
proceeded to decline by 34% in only five weeks. For the one week ended April
14, the index lost a staggering 25.3% and declined every trading day during the
week; the first time since September 1994 that the NASDAQ has declined every
day during a week. The NASDAQ rebounded in June, advancing 15%, the largest
one-month gain ever for the NASDAQ. For the first half of 2000, the S&P 500,
Dow Jones Industrial Average/3/ and the NASDAQ all registered six-month
declines for the first time since 1994. As of June 30, 57% of the New York
Stock Exchange stocks, and 76% of NASDAQ stocks, were down over 20% from their
52-week highs.
Outlook
Despite the market volatility, inflows into equity mutual funds have been
spectacular. During the first quarter, net inflows totaled $133 billion, by far
the largest inflows for a single quarter in history. For the first six months
of 2000, net inflows were approximately $215 billion, well ahead of the $90
billion during the same period in 1999.
------
/1/The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market as a whole. The performance of the
Index does not reflect the deduction of expenses associated with a mutual
fund, such as investment advisor and fund accounting fees. The Fund's
performance reflects the deduction of fees for such value-added services.
/2/The NASDAQ Composite Index is a market capitalization price-only index that
tracks the performance of domestic common stocks traded on the regular
NASDAQ market as well as the National Market System traded foreign common
stocks and American Depositary Receipts.
/3/The Dow Jones Industrial Average is an unmanaged index of thirty large
company stocks that represents the New York Stock Exchange.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
<PAGE>
HSBC Mutual Funds Trust
The supply/demand scenario for equities continues to be favorable. The Initial
Public Offering (the "IPO") backlog is currently at $24.7 billion, down
considerably from $45 billion in late 1999. Weekly IPO pricing of $15 billion
occurred in March, but that figure is currently running at only $2 billion.
The second half calendar of offerings should be minimal. Merger and
acquisition activity appears to have slowed during the first half of 2000, but
cash takeovers are on the rise. Stock buybacks continue to surge, driven by
strong corporate free cash flow.
In the twelve months since the Federal Reserve began tightening, they have
raised short-term interest rates by 175 basis points. During the upcoming
months, the economic statistics should show whether higher borrowing rates are
narrowing the gap between consumption growth and the economy's productive
capacity. We have already seen many signs pointing towards slower economic
growth ahead. Recent market moves cause us to believe that investors are
beginning to discount another successful soft landing for the U.S. economy,
similar to 1995.
Despite the anticipated slowdown in the U.S. economy, earnings estimates for
the S&P 500 are estimated to grow between 14-16% in 2000, and 10-12% in 2001.
The first quarter saw S&P 500 earnings rise 29.6% on a market capitalization
weighted basis. Estimates for the second quarter call for a rise in earnings
of 16-18%. The substantial increase in earnings will significantly lower the
P/E multiples of the major indices. Since 1995, there have been almost 200
company changes in the S&P 500, shifting the index towards higher growth, less
economically sensitive companies. The S&P 500 now resembles a large-cap,
growth-oriented portfolio of companies. We would also note that earnings are
beginning to matter to investors again. During 1999, NASDAQ companies with no
earnings generated an average stock price gain of 115%, while those companies
with profits showed an average price gain of 51%. For the S&P 500, the 11
companies with no earnings showed average price gains of 107%, while the
remaining companies with profits posted an average price gain of 24%. This
year, companies with estimated losses for 2000 are showing average price
declines of approximately 10% in both indices. For companies with profits, the
gains are modest, with average price increases of 10% and 1% for the NASDAQ
and S&P 500, respectively.
Growth and Income Fund Portfolio Summary
During the first half of 2000, the Class A Shares of the Growth and Income
Fund had a total return of 3.15% (without maximum sales charge)*. This return
easily surpassed the negative return of the S&P 500/1/, as well as the Lipper
Growth and Income Index/4/ gain of 1.89%.
We remain positioned towards large-capitalization, growth-oriented companies.
During the dramatic market moves in April, we selectively reduced
overweightings in certain technology holdings on a case-by-case basis where
our valuation model so indicated. We did not raise significant portions of
cash, as the speed and volatility of the correction during the month would
have made any such moves emotional by definition. We will continue to maintain
our long-term position in high-quality companies with superior earnings
prospects.
2
<PAGE>
HSBC Mutual Funds Trust
Our sector weighting decisions had a neutral effect on relative results. We
benefited by being overweight in technology, and underweight in Consumer
Cyclicals and Basic Materials. We continued to shift away from Consumer
Cyclicals because of our belief that higher rates would lead to slower
consumer spending, which accounts for two-thirds of economic activity. Stock
selection was very strong across most sectors, particularly Technology,
Utilities, Capital Goods, Financials and Healthcare. Stock selection in
Consumer Cyclicals and Basic Materials adversely affected relative results.
Sincerely,
/s/ Fredric P. Lutcher
Fredric P. Lutcher, III, CFA
Chief Investment Officer, U.S. Equities
--------
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
* With the maximum sales charge of 5.00%, the total return was (2.04%). The
total return set forth reflects the reduction of a portion of the fund's
fees. Without such reduction of fees, the total return for the period would
have been lower.
/4/The Lipper Growth and Income Fund Index is an index based on the thirty
largest growth and income mutual funds (equally weighted) tracked by Lipper
Analytical Services Incorporated.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
Portfolio composition is subject to change.
The views expressed in this report reflect those of the portfolio manager
through the six months ended June 30, 2000. The manager's views are subject to
change at any time based on the market and other conditions.
3
<PAGE>
HSBC Mutual Funds Trust
Growth and Income Fund
Performance (as of June 30, 2000)
[GRAPH APPEARS HERE]
Growth & Growth &
Income Fund Income Fund Lipper Growth
Class A Shares Class A Shares Standard & Poor's & Income Fund
(without load) (with load) 500 Index(7) Index(8)
June 1990 10,000 9,504 10,000 10,000
December 1990 9,485 9,014 9,399 9,300
December 1991 12,513 11,892 12,262 11,881
December 1992 13,482 12,813 13,197 13,026
December 1993 14,995 14,251 14,527 14,930
December 1994 14,550 13,828 14,718 14,868
December 1995 19,368 18,407 20,249 19,498
December 1996 22,836 21,702 24,899 23,529
December 1997 29,097 27,653 33,206 29,853
December 1998 36,943 35,110 42,695 33,907
December 1999 43,770 41,598 51,680 37,928
June 2000 45,149 42,908 51,460 37,599
Average Annual Total Return
1 Year 5 Year 10 Year
Class A Shares
Offering Price(1) 5.01% 20.12% 15.68%
NAV(2) 10.56% 21.36% 16.27%
Class B Shares
With CDSC(3) 5.57% 21.14% 16.16%
Without CDSC(4) 9.55% 21.14% 16.16%
Class C Shares
With CDSC(5) 8.49% 21.13% 16.15%
Without CDSC(6) 9.48% 21.13% 16.15%
- - Growth and Income Fund
Class A Shares (without load)
------- Growth and Income Fund
Class A Shares (with load)
_______ Standard & Poor's 500 Index(7)
-- - -- Lipper Growth & Income Fund Index(8)
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
(1) Includes the maximum sales charge of 5.00%.
(2) Excludes the maximum sales charge of 5.00%.
(3) Performance of the Class B Shares, which commenced offering on 7/1/99 is
based on the historical performance of the Class A Shares prior to that
date which do not reflect the higher distribution fees or the contingent
deferred sales charge (CDSC) associated with the Class B Shares. Had the
higher distribution fees and the CDSC been incorporated, total return and
hypothetical growth figures would have been lower.
(4) Excludes contingent deferred sales charge for Class B Shares.
(5) Performance of the Class C Shares, which commenced offering on 7/1/99 is
based on the historical performance of the Class A Shares prior to that
date which do not reflect the higher distribution fees or the contingent
deferred sales charge (CDSC) associated with the Class C Shares. Had the
higher distribution fees and the CDSC been incorporated, total return and
hypothetical growth figures would have been lower.
(6) Excludes contingent deferred sales charge for Class C Shares.
(7) The Standard & Poor's 500 Index is a widely accepted unmanaged index of
overall stock market performance and does not reflect the expenses
associated with a mutual fund, such as investment advisory and fund
accounting fees. The Fund's performance reflects the deduction of fees for
these value added services.
(8) The Lipper Growth and Income Fund Index is an index based on the thirty
largest growth and income mutual funds (equally weighted) tracked by
Lipper Analytical Services Incorporated.
The above illustration compares a $10,000 investment in the Growth and Income
Fund, Class A shares, on July 1, 1990 to a $10,000 investment in the Standard
& Poor's 500 Index and the Lipper Growth and Income Fund Index. All dividends
and realized gains are reinvested.
The Fund's performance reflects the reduction of a portion of the Fund's fees.
Without the reduction of such fees the performance for the period would have
been lower.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
4
<PAGE>
HSBC Mutual Funds Trust
HSBC Fixed Income Fund
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Portfolio Review
Dear Shareholder:
The primary driving force during the first half of the year was the activity of
the Federal Reserve (the "Fed") Open Market Committee (the "FOMC") which on May
16 raised both the Fed Funds and Discount rates by 50 basis points. This marked
the first time that the Fed Funds rate had moved by a full 50 basis points at
one time since it began its tightening cycle in June 1999, after having moved
gradually in 25 basis point increments. The current Fed Funds rate now stands
at 6.50%, which represents 175 basis points of cumulative tightening since June
1999.
After the Fed's aggressiveness in May, the bond markets reflected on the
consequences of the June 28, 2000 Fed meeting. As such the markets were looking
for further increases in interest rates but the widespread evidence of a
slowdown in economic activity and inflation cooled down the Fed, leaving rates
unchanged. The primary drivers behind this cooling off were a benign employment
report as well as a fairly tame Producer Price Index and Consumer Price Index
reports/1/.
The shift in market sentiment during June has been quite noticeable, as the
United States (U.S.) Treasury markets have rallied nicely all across the yield
curve. Additionally, mortgage rates have fallen from their recent highs and
with corporate yields falling as well, we expect to see a large calendar of
corporate issuance coming over the next several weeks. Spread product fared
well recently as spreads narrowed versus their previous high levels and U.S.
Agencies, mortgages and corporate bonds all posted higher returns compared to
those of U.S. Treasuries.
The Class A Shares of the Fixed Income Fund returned (excluding maximum sales
charge)* 1.74% for the second quarter and 3.89% for the six months ended June
30, 2000. This compares favorably to the Lipper Corporate Debt Funds A-Rated
Index/2/ which returned 0.86% for the second quarter and 3.01% on a year to
date basis. The Lehman Aggregate Bond Index/3/ returned 1.74% for the second
quarter and 3.99% for the first six months of 2000.
-------
* With the maximum sales charge of 4.75% the total returns were (3.08%) and
(1.05%), respectively. The total return set forth reflects the reduction of a
portion of the fund's fees. Without such a reduction of fees, the total
return for the periods would have been lower.
/1/The Producer Price Index and the Consumer Price Index are two measures of
the average changes in prices, over time, of two fixed market baskets of
goods.
/2/The Lipper Corporate Debt Funds A-Rated Index consists of funds that invest
at least 65% of its assets in corporate debt issues rated "A" or better or
government issues.
/3/The Lehman Aggregate Bond Index (the "Index") is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and
includes Treasury issues, agency issues, corporate bond issues and mortgage-
backed securities. The performance of the Index does not reflect the expenses
associated with a mutual fund such as investment advisory and fund accounting
fees. The Fund's performance reflects the deduction of fees for these value
added services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
5
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HSBC Mutual Funds Trust
Our duration bets, which saw the fund short of the Lehman Aggregate Bond Index
benchmark, as well as our overweight in corporate bond spread product helped
our performance considerably as spreads narrowed in from their historical
highs. In particular, our holdings of J.C. Penney, Philip Morris and Lockheed
all generated excellent returns.
Sincerely,
/s/ Edward J. Merkle
Edward J. Merkle
Managing Director, Fixed Income
--------
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
Portfolio composition is subject to change.
The views expressed in this report reflect those of the portfolio manager for
the six months ended June 30, 2000. The manager's views are subject to change
at any time based on the market and other conditions.
6
<PAGE>
HSBC Mutual Funds Trust
Fixed Income Fund
Performance (as of June 30, 2000)
[GRAPH APPEARS HERE]
Fixed Fixed
Income Fund Income Fund Lehman
Class A Shares Class A Shares Aggregate
(without load) (with load) Bond Index(3)
January 1993 10,000 9,527 10,000
December 1993 10,859 10,342 10,768
December 1994 10,653 10,146 10,454
December 1995 12,435 11,843 12,386
December 1996 12,698 12,094 12,835
December 1997 13,793 13,136 14,075
December 1998 14,942 14,231 15,297
December 1999 14,664 13,966 15,172
December 2000 15,235 14,509 15,776
Average Annual Total Return
Inception
1 Year 5 Year (1/15/93)
Class A Shares
Offering Price(1) -0.76% 4.26% 5.12%
NAV(2) 4.16% 5.28% 5.81%
- - Fixed Income Fund
Class A Shares (without load)
------- Fixed Income Fund
Class A Shares (with load)
_______ Lehman Aggregate Bond Index(3)
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
(1)Includes the maximum sales charge of 4.75%.
(2)Excludes the maximum sales charge of 4.75%.
(3) Lehman Aggregate Bond Index (the "Index") is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and
includes Treasury issues, agency issues, corporate bond issues and
mortgage-backed securities. The Index does not reflect the expenses
associated with a mutual fund, such as investment advisory and fund
accounting fees. The performance of the Fixed Income Fund reflects the
deduction of fees for these value added services.
The above illustration compares a $10,000 investment in the Fixed Income Fund,
Class A shares, on January 15, 1993 (date of inception) to a $10,000
investment in the Lehman Aggregate Bond Index on that date. All dividends and
realized gains are reinvested.
The Fund's performance reflects the reduction of a portion of the Fund's fees.
Without the reduction of such fees the performance for the period would have
been lower.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
7
<PAGE>
HSBC Mutual Funds Trust
New York Tax-Free Bond Fund+
--------------------------------------------------------------------------------
Portfolio Review
Dear Shareholder:
Municipal bonds outperformed taxable bonds on a pretax basis in the first half
of 2000. The year to date return of the Lehman Aggregate Bond Index/1/ was
3.99%. By comparison the Lehman Municipal Bond Index/2/ returned 4.48% for the
same period. Yields were lower across the treasury yield curve ranging from 16
basis points lower on five year bonds to 58 basis points lower on thirty year
bonds while municipal bond yields were lower by just 4-20 basis points across
the municipal yield curve. New York outperformed the rest of the municipal
market by 16 basis points as reflected by the total return of the Lehman New
York State Exempt Index/3/ (the "Lehman Index") which returned 4.64%.
For the six months ended June 30, 2000, the Class A Shares of the New York Tax-
Free Bond Fund had a total return of 4.13% (excluding maximum sales charge)*
versus the 4.31% return of the Lipper New York Municipal Debt Funds/4/. As of
June 30, 2000 the fund's duration which takes into account interim principal
payments was 6.68 years which approximated about 93% of the duration of the
Lehman Index. The average maturity of the fund was 8.52 years. In terms of
sector diversification, the largest sectors consisted of general obligations
(18.0%), medical revenue (16.5%) and higher education (15.3%).
Given our fixed income outlook for additional Fed tightening and higher rates,
we anticipate that the municipal market will outperform taxables in line with
the propensity of municipals to outperform in a rising yield environment.
Supply technicals should continue to be favorable going forward as higher rates
and no hard landing in the economy is in our forecast. This outperformance will
only be seen in bonds with premium dollar prices. Bonds trading at a discount
will experience negative convexity associated with the deminimus rule and
subsequently underperform.
We expect that the municipal credit curve's flattening will continue over the
near term in sympathy with the treasury curve inversion. In contrast, stronger
cash flows will probably favor the intermediate and short-term portion of the
curve as casualty companies and retail continue to be relatively strong
participants. Our duration target positioning of 93% of benchmark target
represents a bias toward higher rates.
We continue to favor insured credits along the credit curve and underweight A
and Baa bonds. We have seen the insured paper and A paper price as tight as 2
basis points. Insured hospitals with a good underlying story can be obtained
with a significant yield pick up to many A rated credits in other sectors. Baa
paper continues to be only about 15 basis points cheaper than A rated credits.
If we were to get involved in Baa credits we would select the 1-5 year portion
of the curve as that is where credit spreads to the generic AAA G.O. curve are
at their widest as
8
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HSBC Mutual Funds Trust
compared to the long end of the curve. The short end of lower rated municipals
is where one receives the greater relative compensation for extending along
the credit curve. Currently, our portfolio does not contain any issues rated
below A. The fund began investing in the hospital sector. Over the course of
the last five years, we have benefited from a significant underweight in this
sector. Nevertheless current spreads between this sector and other similarly
rated issuers in different sectors have become quite compelling. We approach
this sector looking for credits which in addition to strong operations also
have an outlying credit factor which lends support to the credit beyond simply
its financial operations.
Sincerely,
/s/ Jerry Samet
Jerry Samet
Senior Fixed Income Portfolio Manager
--------
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
+ A fund's income may be subject to certain state and local taxes and,
depending upon your tax status, the federal alternative minimum tax.
Regional funds may be subject to additional risks, since the issues they
invest in are located in one geographical location.
* With the maximum sales charge of 4.75%, the Class A Shares of the Fund had a
total return of (0.86%). The total return set forth reflect the reduction of
a portion of the Fund's fees. Without such a reduction of fees, the total
return for the period would have been lower.
/1/The Lehman Aggregate Bond Index is a market value-weighted index that
tracks the daily price, coupon, paydowns and total return performance of
fixed-rate, publicly placed, dollar denominated and nonconvertible,
investment-grade debt issues with at least $100 million par amount
outstanding and with at least one year to final maturity.
/2/The Lehman Municipal Bond Index is a widely accepted unmanaged index of
overall municipal bond market performance and does not take into account
charges, fees, and other expenses.
/3/The Lehman New York State Exempt Index is a broad based, total return index
which is comprised of bonds issued in the State of New York.
/4/The Lipper New York Municipal Debt Funds Index consists of funds that
invest at least 65% of their assets in municipal debt issues that are exempt
from taxation in New York (double tax-exempt) or a city in New York (triple
tax-exempt).
The performance of the indices (except for the Lipper New York Municipal Debt
Funds Index) does not reflect the deduction of expenses associated with a
mutual fund such as investment advisory and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
Portfolio composition is subject to change.
The views expressed in this report reflect those of the portfolio manager
through the six months ended June 30, 2000. The manager's views are subject to
change at any time based on the market and other conditions.
9
<PAGE>
HSBC Mutual Funds Trust
New York Tax-Free Bond Fund
Performance (as of June 30, 2000)
[GRAPH APPEARS HERE]
New York New York
Tax-Free Tax-Free Lehman
Bond Fund Bond Fund 7-Year
Class A Shares Class A Shares Municipal
(without load) (with load) Bond Index(5)
June 1990 10,000 9,528 10,000
December 1990 10,398 9,907 10,454
December 1991 11,708 11,155 11,673
December 1992 12,954 12,343 12,613
December 1993 14,802 14,104 13,929
December 1994 13,598 12,956 13,546
December 1995 15,660 14,921 15,459
December 1996 16,286 15,517 16,136
December 1997 17,746 16,908 17,377
December 1998 16,809 17,921 18,459
December 1999 18,137 17,281 18,433
December 2000 18,885 17,994 19,031
Average Annual Total Return
1 Year 5 Year 10 Year
Class A Shares
Offering Price(1) -2.88% 4.25% 6.05%
NAV(2) 1.97% 5.26% 6.56%
Class B Shares
With CDSC(3) -2.96% 5.05% 6.46%
Without CDSC(4) 0.94% 5.05 % 6.46%
- - New York Tax-Free Bond Fund
Class A Shares (without load)
------- New York Tax-Free Bond Fund
Class A Shares (with load)
_______ Lehman 7-Year Municipal Bond Index(5)
The performance data quoted represents past performance and is not a
indication of future results. The investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
(1) Includes the maximum sales charge of 4.75%.
(2) Excludes the maximum sales charge of 4.75%.
(3) Performance of the Class B Shares, which commenced offering on 7/1/99 is
based on the historical performance of the Class A Shares prior to that
date which do not reflect the higher distribution fees or the contingent
deferred sales charge (CDSC) associated with the Class B Shares. Had the
higher distribution fees and the CDSC been incorporated, total return and
hypothetical growth figures would have been lower.
(4) Excludes contingent deferred sales charge for Class B Shares.
(5) The Lehman 7-Year Municipal Bond Index is a widely accepted unmanaged
index of overall municipal bond market performance and does not reflect
the expenses associated with a mutual fund, such as investment advisory
and fund accounting fees. The Fund's performance reflects the deduction of
fees for these value added services.
The above illustration compares a $10,000 investment the New York Tax-Free
Bond Fund, Class A Shares, on July 1, 1990 to a $10,000 investment in the
Lehman 7-Year Municipal Bond Index on that date. All dividends and capital
gain distributions are reinvested.
The Fund's performance reflects the reduction of a portion of the Fund's fees.
Without the reduction of such fees the performance for the period would have
been lower.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
10
<PAGE>
HSBC Mutual Funds Trust
Board of Trustees
JEFFREY J. HAAS Professor of Law, New York Law School
RICHARD J. LOOS Former Managing Director, HSBC Asset Management
Americas Inc.
CLIFTON H.W. MALONEY President, C.H.W. Maloney & Co. Inc.
JOHN C. MEDITZ President, Horizon Asset Management, Inc.
HARALD PAUMGARTEN Managing Director, Heritage Capital Corp.
JOHN P. PFANN Former Senior Vice President and Treasurer, ITT
ROBERT A. ROBINSON Trustee, Henrietta and B. Frederick H. Bugher
Foundation
--------------------------------------------------------------------------------
Officers
WALTER B. GRIMM President
ANTHONY J. FISCHER Vice President
CHARLES L. BOOTH Vice President
MARK L. SUTER Vice President
NADEEM YOUSAF Treasurer
STEVEN R. HOWARD Secretary
ALAINA V. METZ Assistant Secretary
ROBERT L. TUCH Assistant Secretary
11
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Security Description Value
------ -------------------- ------------
<C> <S> <C>
COMMON STOCKS (98.3%)
Automotive (0.8%)
21,100 Ford Motor Co............................................ $ 907,300
2,763 Visteon Corp.(b)......................................... 33,498
------------
940,798
------------
Banking (4.3%)
27,200 Bank of New York Co., Inc................................ 1,264,800
39,750 Chase Manhattan Corp..................................... 1,830,984
50,300 Wells Fargo & Co......................................... 1,949,125
------------
5,044,909
------------
Beverages (2.3%)
29,400 Coca-Cola Co............................................. 1,688,662
23,000 PepsiCo, Inc............................................. 1,022,063
------------
2,710,725
------------
Broadcasting/Cable (2.0%)
15,500 AMFM Inc.(b)............................................. 1,069,500
18,600 Comcast Corp.(b)......................................... 753,300
8,200 MediaOne Group, Inc.(b).................................. 543,773
------------
2,366,573
------------
Chemicals (0.9%)
20,300 Union Carbide Corp....................................... 1,004,850
------------
Computer Software (8.8%)
21,200 Automatic Data Processing, Inc........................... 1,135,525
61,000 Microsoft Corp.(b)....................................... 4,880,000
41,200 Oracle Corp.(b).......................................... 3,463,375
6,500 Veritas Software Corp.(b)................................ 734,602
------------
10,213,502
------------
Computers & Peripherals (19.5)
8,800 Applied Materials, Inc.(b)............................... 797,500
69,400 Cisco Systems, Inc.(b)................................... 4,411,237
51,400 Dell Computer Corp.(b)................................... 2,534,663
45,400 EMC Corp.(b)............................................. 3,492,962
10,900 Hewlett-Packard Co....................................... 1,361,138
34,900 Intel Corp............................................... 4,665,693
</TABLE>
12
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Security Description Value
------ -------------------- ------------
<C> <S> <C>
COMMON STOCKS (continued)
Computers & Peripherals (continued)
16,700 International Business Machines Corp..................... $ 1,829,694
11,000 LSI Logic Corp.(b)....................................... 595,375
21,100 Sun Microsystems, Inc.(b)................................ 1,918,781
15,600 Texas Instruments, Inc................................... 1,071,525
------------
22,678,568
------------
Consumer Goods & Services (1.6%)
49,900 Philip Morris Cos., Inc.................................. 1,325,468
9,700 Sealed Air Corp.(b)...................................... 508,038
------------
1,833,506
------------
Diversified (6.6%)
91,800 General Electric Co...................................... 4,865,400
58,500 Tyco International Ltd................................... 2,771,438
------------
7,636,838
------------
Electric (0.5%)
15,500 Peco Energy Co........................................... 624,844
------------
Entertainment (0.6%)
19,000 Walt Disney Co........................................... 737,438
------------
Financial Services (6.2%)
15,000 American Express Co...................................... 781,875
54,000 Citigroup, Inc........................................... 3,253,500
38,600 MBNA Corp................................................ 1,047,025
25,000 Morgan Stanley Dean Witter & Co.......................... 2,081,250
------------
7,163,650
------------
Health Care (2.5%)
19,100 Johnson & Johnson........................................ 1,945,812
18,300 Medtronic, Inc........................................... 911,569
------------
2,857,381
------------
Industrial Goods & Services (2.6%)
30,900 American Power Conversion Corp.(b)....................... 1,261,106
19,200 Calpine Corp.(b)......................................... 1,262,400
7,700 Eaton Corp............................................... 515,900
------------
3,039,406
------------
</TABLE>
13
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Security Description Value
------ -------------------- ------------
<C> <S> <C>
COMMON STOCKS (continued)
Insurance (2.9%)
19,200 American International Group, Inc........................ $ 2,256,000
33,000 AXA Financial, Inc....................................... 1,122,000
------------
3,378,000
------------
Internet Software (1.1%)
24,100 America Online, Inc.(b).................................. 1,271,275
------------
Multimedia (2.4%)
13,400 Time Warner, Inc......................................... 1,018,400
26,000 Viacom, Inc.(b).......................................... 1,772,875
------------
2,791,275
------------
Oil & Gas Exploration, Production, and Services (5.9%)
16,800 Enron Corp............................................... 1,083,600
43,500 Exxon Mobil Corp......................................... 3,414,749
18,600 Royal Dutch Petroleum Co................................. 1,145,063
7,700 Schlumberger Ltd......................................... 574,613
10,800 Transocean Sedco Forex, Inc.............................. 577,125
------------
6,795,150
------------
Paper Products (0.6%)
22,000 International Paper Co................................... 655,875
------------
Pharmaceuticals (9.1%)
20,900 American Home Products Corp.............................. 1,227,875
27,200 Cardinal Health, Inc.*................................... 2,012,800
18,600 Eli Lilly & Co.*......................................... 1,857,675
34,900 Merck & Co., Inc......................................... 2,674,213
56,975 Pfizer, Inc.............................................. 2,734,800
------------
10,507,363
------------
Retail Stores (5.7%)
19,600 Circuit City Stores, Inc................................. 650,475
32,600 CVS Corp................................................. 1,304,000
36,200 Home Depot, Inc.......................................... 1,807,738
50,100 Wal-Mart Stores, Inc..................................... 2,887,012
------------
6,649,225
------------
</TABLE>
14
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Security Description Value
--------- -------------------- ------------
<C> <S> <C>
COMMON STOCKS (continued)
Telecommunications (11.4%)
46,300 AT&T Corp............................................ $ 1,464,238
31,300 GTE Corp............................................. 1,948,425
5,400 JDS Uniphase Corp.(b)................................ 647,325
25,700 Lucent Technologies, Inc............................. 1,522,725
46,100 MCI Worldcom, Inc.(b)................................ 2,114,837
26,700 Motorola, Inc........................................ 775,969
15,400 Nextel Communications, Inc.(b)....................... 942,288
29,600 Nortel Networks Corp................................. 2,020,199
10,800 Sprint Corp.......................................... 550,800
14,100 US West, Inc......................................... 1,209,075
------------
13,195,881
------------
Total Common Stocks (Cost - $78,948,118)..................... 114,097,032
------------
INVESTMENT COMPANIES (1.7%)
2,001,000 Provident Institutional Temporary Investment Fund.... 2,001,000
------------
Total Investment Companies (Cost - $2,001,000)............... 2,001,000
------------
Total Investments (Cost - $80,949,118) (a)--100.0%........... 116,098,032
Liabilities in excess of other assets--0.0%.................. (21,643)
------------
NET ASSETS--100.0%........................................... $116,076,389
============
</TABLE>
--------
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $38,639,808
Unrealized depreciation....................................... (3,490,894)
-----------
Net unrealized appreciation................................... $35,148,914
===========
</TABLE>
(b) Represents a non-income producing security.
* A portion of the security is segregated for call options written.
Schedule of Written Call Options:
<TABLE>
<CAPTION>
Growth and
Income Fund
------------------
Contracts Value
--------- --------
<S> <C> <C>
Options outstanding at the end of period consist of:
Cardinal Health, Inc., $65, 9/18/00 ........................ 110 $127,875
Eli Lilly & Co., $105, 7/24/00.............................. 50 8,438
--- --------
Total (premiums received $102,642).......................... 160 $136,313
=== ========
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
FIXED INCOME FUND
<TABLE>
<CAPTION>
Maturity Principal Market
Rate Date Amount Value
---- -------- ---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (39.7%)
Aerospace & Defense (5.8%)
Lockheed Martin Corp................... 8.20% 12/1/09 $2,500,000 $ 2,523,760
-----------
Banking (5.8%)
BankAmerica Corp....................... 7.88 12/1/02 2,500,000 2,523,355
-----------
Consumer Goods & Services (3.1%)
Philip Morris Cos., Inc................ 8.25 10/15/03 1,363,000 1,360,026
-----------
Electric Utility (10.0%)
American Electric Power, Inc........... 7.25 10/1/02 2,500,000 2,480,813
Commonwealth Edison.................... 6.95 7/15/18 2,000,000 1,803,204
-----------
4,284,017
-----------
Financial Services (6.2%)
Associates Corp., NA................... 5.75 11/1/03 1,500,000 1,417,219
Chase Manhattan Grantor Trust, Series
1996-A, Class A, ABS.................. 5.20 2/15/02 72,945 72,681
Ford Credit Auto Owner Trust, 1998-C,
Class A-4............................. 5.81 3/15/02 186,616 185,824
Travelers Property Casualty Corp....... 7.75 4/15/26 1,000,000 967,848
-----------
2,643,572
-----------
Retail (4.6%)
Penney (JC) Co., Inc., Callable 7/15/00
@ 100................................. 9.45 7/15/02 2,000,000 2,000,976
-----------
Telecommunications (4.2%)
MCI Worldcom, Inc...................... 6.50 4/15/10 2,000,000 1,817,274
-----------
Total Corporate Bonds (Cost - $17,822,222)...................... 17,152,980
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (38.9%)
Federal National Mortgage Association (16.2%)
Medium Term Note, Callable 7/24/00
@100.................................. 6.34 3/8/04 1,000,000 971,592
Pool #250414........................... 7.00 12/1/25 2,482,394 2,396,493
Pool #310001........................... 6.00 9/1/00 338,466 335,822
Pool #343195........................... 7.50 5/1/26 1,212,261 1,195,581
Pool #343812........................... 7.50 5/1/26 160,102 157,899
Series 1993-104, Class C, REMIC........ 6.50 3/25/21 2,000,000 1,933,836
-----------
6,991,223
-----------
</TABLE>
16
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
FIXED INCOME FUND
<TABLE>
<CAPTION>
Maturity Principal Market
Rate Date Amount Value
-------------------------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (continued)
Federal Home Loan Mortgage Corporation (18.4%)
Medium Term Note, Callable 7/24/00 @
100.................................... 8.00% 10/27/09 $2,500,000 $ 2,472,933
Pool #220019............................ 7.75 1/1/02 9,246 9,301
Pool #C00922............................ 8.00 2/1/30 3,916,021 3,939,844
Pool #D62926............................ 6.50 8/1/25 1,627,510 1,535,809
-----------
7,957,887
-----------
Government National Mortgage Association (4.3%)
Pool # 356578........................... 7.50 6/15/23 1,882,173 1,877,805
-----------
Total U.S. Government Agency Obligations (Cost - $16,793,243)..... 16,826,915
-----------
U.S. TREASURY OBLIGATIONS (9.5%)
U.S. Treasury Bonds (0.6%)
U.S. Treasury Bonds..................... 8.75 8/15/20 200,000 256,563
-----------
U.S. Treasury Notes (8.9%)
U.S. Treasury Notes..................... 7.50 2/15/05 3,200,000 3,355,999
U.S. Treasury Notes..................... 6.63 5/15/07 500,000 510,313
-----------
3,866,312
-----------
Total U.S. Treasury Obligations (Cost - $4,056,950)............... 4,122,875
-----------
MUNICIPAL OBLIGATIONS (4.5%)
Oakland, California Pension Obligation,
Sub-Series A (MBIA Insured)............ 6.91 12/15/07 2,000,000 1,931,800
-----------
Total Municipal Obligations (Cost - $2,000,000)................... 1,931,800
-----------
</TABLE>
17
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
FIXED INCOME FUND
<TABLE>
<CAPTION>
Market
Shares Value
---------- -----------
<S> <C> <C>
INVESTMENT COMPANIES (6.9%)
Provident Federal Fund................................. 886,000 $ 886,000
Provident Institutional Temporary Investment Fund...... 2,096,000 2,096,000
-----------
Total Investment Companies (Cost - $2,982,000).................... 2,982,000
-----------
Total Investments (Cost - $43,654,415) (a)--99.5%................. 43,016,570
Other assets in excess of liabilities--0.5%....................... 236,838
-----------
NET ASSETS--100.0%................................................ $43,253,408
===========
</TABLE>
--------
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 322,993
Unrealized depreciation........................................ (960,838)
---------
Net unrealized depreciation.................................... $(637,845)
=========
</TABLE>
ABS - Automated Bond System
MBIA - Municipal Bond Insurance Association
NA - National Association (National Bank)
REMIC - Real Estate Mortgage Investment Conduit
See Notes to Financial Statements.
18
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited)
NEW YORK TAX-FREE BOND FUND
<TABLE>
<CAPTION>
Moody's/S&P Principal
Ratings Security Description Amount Value
----------- -------------------- ---------- -----------
<C> <S> <C> <C>
MUNICIPAL BONDS (96.6%)
New York (96.6%)
Aaa, AAA Albany County, New York Airport
Authority, Airport Revenue, AMT (FSA
Insured), 5.50%, 12/15/19, Callable
12/15/07 @ 102.......................... $ 750,000 $ 721,875
Aaa, AAA Bethlehem, New York Central School
District, GO, (AMBAC Insured), 7.10%,
11/1/07................................. 200,000 225,250
Aaa, AAA Metropolitan Transportation Authority,
New York Transportation Facilities
Revenue, Series A (MBIA Insured), 5.63%,
7/1/25, Callable 7/1/07 @ 101.5......... 1,200,000 1,176,000
Aa2, AA Monroe County, New York, Series B, GO,
7.00%, 6/1/04, Callable 12/1/00 @ 101... 10,000 10,198
A3, A- New York City, Series A, GO, 7.75%,
8/15/04, Callable 8/15/01 @ 101.5....... 10,000 10,488
N/R, A- New York City, Series A, GO, 7.75%,
8/15/04, Prerefunded 8/15/01 @ 101.5.... 590,000 618,763
AAA, A- New York City, Series A, GO, 7.75%,
8/15/04, Prerefunded 8/15/01 @ 101.5.... 305,000 320,250
A3, A- New York City, Series A, GO, 7.75%,
8/15/07, Callable 8/15/01 @ 101.5....... 70,000 73,413
A3, A- New York City, Series B, GO, 7.50%,
2/1/07, Callable 2/1/02 @ 101.5......... 1,000,000 1,053,750
A3, A- New York City, Series E, GO, 6.50%,
2/15/06................................. 1,200,000 1,287,000
A3, A- New York City, Series F, GO, 8.40%,
11/15/05, Callable 11/15/01 @ 101.5..... 45,000 47,925
AAA, AAA New York City, Series F, GO, 8.40%,
11/15/05, Prerefunded 11/15/01 @ 101.5.. 105,000 111,825
A3, A- New York City, Series G, GO, 6.75%,
2/1/09.................................. 1,000,000 1,108,750
Aa3, AA New York City, Transitional Finance
Authority Revenue, Series B, FTS, 4.75%,
11/1/23, Callable 5/1/09 @ 101.......... 1,500,000 1,276,875
Aaa, AAA New York City, Trust For Cultural
Resources Revenue, Museum of Modern Art
(AMBAC Insured), 6.40%, 1/1/04,
Prerefunded 1/1/02 @ 102................ 350,000 365,750
Aaa New York State, Dormitory Authority
Revenue, Series A-55 (MBIA Insured),
4.85%, 2/15/07*......................... 1,300,000 1,300,000
Aaa, AAA New York State, Dormitory Authority
Revenue, City University System Revenue,
Series A (FGIC-TCRS Insured), 5.75%,
7/1/18.................................. 2,370,000 2,444,062
</TABLE>
19
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
NEW YORK TAX-FREE BOND FUND
<TABLE>
<CAPTION>
Moody's/S&P Principal
Ratings Security Description Amount Value
----------- -------------------- ---------- -----------
<C> <S> <C> <C>
MUNICIPAL BONDS (continued)
New York (continued)
Aaa, AAA New York State, Dormitory Authority
Revenues, Mental Health Services
Facilities Revenue, Series G, 4.50%,
8/15/18, Callable 8/15/08 @ 101.......... $1,650,000 $ 1,396,313
Aaa, AAA New York State, Dormitory Authority
Revenues, State University Education
Facilities Revenue, Series A (MBIA
Insured), 5.88%, 5/15/11................. 1,500,000 1,599,375
Aaa, AAA New York State, Dormitory Authority, Lease
Revenue, Municipal Health Facilities
Improvement Programs, Series 1, 4.75%,
1/15/29, Callable 1/15/09 @ 101.......... 1,000,000 826,250
Aaa, AA+ New York State, Environmental Facilities
Corporation, Pollution Control Revenue,
State Water, Series A, 7.00%, 6/15/12,
Callable 6/15/01 @ 102................... 150,000 156,333
Aaa, AA+ New York State, Environmental Facilities
Corporation, Pollution Control Revenue,
State Water, Series A, 7.00%, 6/15/12,
Prerefunded 6/15/01 @ 102................ 150,000 156,603
Aa1, AA- New York State, Environmental Facilities
Corporation, Pollution Control Revenue,
State Water, Series B, 7.50%, 3/15/11,
Callable 8/21/00 @ 101................... 250,000 252,023
Aa2, A+ New York State, Environmental Facilities
Corporation, Pollution Control Revenue,
State Water, Series C, 7.20%, 3/15/11,
Callable 8/21/00 @ 102................... 200,000 203,750
Aa1, AA New York State, Housing Finance Agency
Revenue, Multifamily Mortgage Housing
Revenue, Series A (FHA Insured), 7.00%,
8/15/22, Callable 8/15/02 @ 102.......... 900,000 942,750
Aa1, N/R New York State, Medical Care Facilities
Finance Agency Revenue, Security
Management Programs, Adult Day Care,
Series A (SONYMA Insured), 6.38%,
11/15/20, Callable 11/15/05 @ 102........ 1,945,000 2,020,368
Aaa, AAA New York State, Medical Care Facilities
Finance Agency Revenue, Series A (FSA
Insured), 7.70%, 2/15/18, Callable
8/21/00 @ 100............................ 80,000 80,160
Aaa, AAA New York State, Urban Development
Corporation, Senior Lien, Corporate
Purpose, 5.50%, 7/1/16, Callable 7/1/06 @
102...................................... 2,000,000 1,997,500
Aaa, AAA Niagara, New York Frontier Authority,
Airport Revenue, Series A, AMT (AMBAC
Insured), 6.13%, 4/1/14, Callable 4/1/04
@ 102.................................... 2,400,000 2,480,999
N/A/A-1+ Suffolk County, New York Industrial
Development Agency Research Facilities
Revenue, 4.55%, 7/1/23*.................. 400,000 400,000
</TABLE>
20
<PAGE>
HSBC Mutual Funds Trust
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited) (continued)
NEW YORK TAX-FREE BOND FUND
<TABLE>
<CAPTION>
Principal
Moody's/S&P Amount
Ratings Security Description or Shares Value
----------- -------------------- ---------- -----------
<C> <S> <C> <C>
MUNICIPAL BONDS (continued)
New York (continued)
Aa3, A TSASC, Inc., New York, Revenue, 6.38%,
7/15/39, Callable 7/15/09 @101.......... $1,000,000 $ 1,012,500
-----------
25,677,098
-----------
Total Municipal Bonds (Cost - $25,504,462)........... 25,677,098
-----------
INVESTMENT COMPANIES (1.9%)
Dreyfus New York Tax Free................ 229,000 229,000
New York Money Fund...................... 284,000 284,000
-----------
Total Investment Companies (Cost - $513,000)......... 513,000
-----------
Total Investments (Cost - $26,017,462) (a)--98.5%.... 26,190,098
Other assets in excess of liabilities--1.5%.......... 395,712
-----------
NET ASSETS--100.0%................................... $26,585,810
===========
</TABLE>
--------
(a) Represents cost for financial reporting purposes and differs from value
by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $ 675,197
Unrealized depreciation......................................... (502,561)
---------
Net unrealized appreciation..................................... $ 172,636
=========
</TABLE>
* Variable rate security. Rate represents rate in effect at June 30, 2000.
Date presented represents the next rate change date.
AMBAC - American Municipal Bond Assurance Corp.
AMT - Alternative Minimum Taxable Paper
FGIC - Financial Guaranty Insurance Corp.
FHA - Federal Housing Administration
FSA - Financial Security Assurance, Inc.
FTS - Future Tax Secured
GO - General Obligation
MBIA - Municipal Bond Assurance Association
SONYMA - State of New York Mortgage Agency
TCRS - Transferable Custody Receipts
See Notes to Financial Statements.
21
<PAGE>
HSBC Mutual Funds Trust
Statements of Assets and Liabilities
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Growth Fixed New York
and Income Tax-Free
Income Fund Fund Bond Fund
------------ ----------- -----------
<S> <C> <C> <C>
Assets:
Investments, at value (cost
$80,982,789, $43,654,415,
$26,017,462, respectively)............ $116,098,032 $43,016,570 $26,190,098
Cash................................... 215 2,606 882
Interest receivable.................... -- 455,252 518,655
Dividends receivable................... 91,663 40,837 4,988
Receivable for capital shares issued... 65,612 25 --
Receivable from investment securities
sold.................................. 20,475 16 --
Prepaid expenses....................... 12,149 4,820 3,024
------------ ----------- -----------
Total Assets............................ 116,288,146 43,520,126 26,717,647
------------ ----------- -----------
Liabilities:
Dividends payable...................... -- 230,831 98,479
Payable for capital shares redeemed.... 3,387 -- --
Option contracts written, at market
value (Premiums received $102,642, $0,
$0, respectively)..................... 136,313 -- --
Accrued expenses and other liabilities:
Investment advisory................... 51,843 19,431 10,095
Administration........................ 9,426 3,533 2,243
Service organization.................. 1,251 -- 96
Distribution.......................... 4,306 133 3,916
Other................................. 5,231 12,790 17,008
------------ ----------- -----------
Total Liabilities....................... 211,757 266,718 131,837
------------ ----------- -----------
Net Assets.............................. $116,076,389 $43,253,408 $26,585,810
============ =========== ===========
Composition of Net Assets:
Capital................................ $ 73,780,593 $46,153,829 $26,972,339
Accumulated net investment income
(distributions in excess)............. (56,973) 53,100 (18,944)
Accumulated net realized gain/(loss)
from investment and options
transactions.......................... 7,237,526 (2,315,676) (540,221)
Unrealized appreciation (depreciation)
from investments and options.......... 35,115,243 (637,845) 172,636
------------ ----------- -----------
Net Assets.............................. $116,076,389 $43,253,408 $26,585,810
============ =========== ===========
Class A Shares:
Net assets............................ $109,570,286 $43,253,408 $26,113,897
Shares outstanding.................... 7,119,861 4,474,395 2,391,956
------------ ----------- -----------
Net Asset Value and Redemption Price
per share............................ $15.39 $9.67 $10.92
============ =========== ===========
Maximum sales charge.................. 5.00% 4.75% 4.75%
Maximum Offering Price per share (Net
Asset Value/(100%--Maximum sales
charge))............................. $16.20 $10.15 $11.46
============ =========== ===========
Class B Shares:
Net assets............................ $ 6,338,222 $ 471,913
Shares outstanding................... 415,474 43,232
------------ -----------
Net Asset Value, Offering Price and
Redemption Price per share*.......... $15.26 $10.92
============ ===========
Class C Shares:
Net assets............................ $ 167,881
Shares outstanding................... 11,006
------------
Net Asset Value, Offering Price and
Redemption Price per share*.......... $15.25
============
</TABLE>
--------
*Redemption Price per share varies by the length of time that shares are held.
See Notes to Financial Statements.
22
<PAGE>
HSBC Mutual Funds Trust
Statements of Operations
For the six months ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Growth Fixed New York
and Income Tax-Free
Income Fund Fund Bond Fund
----------- ---------- ----------
<S> <C> <C> <C>
Investment Income:
Interest.................................. $ -- $1,512,775 $ 804,868
Dividends................................. 478,197 54,602 7,138
---------- ---------- ----------
Total Investment Income.................... 478,197 1,567,377 812,006
---------- ---------- ----------
Expenses:
Investment advisory....................... 318,288 117,044 61,808
Administration............................ 86,807 31,921 20,603
Service Organization:
Class B Shares........................... 11,840 -- 881
Class C Shares........................... 270 -- --
Distribution:
Class A Shares........................... 1,880 175 22,792
Class B Shares........................... 17,760 -- 1,321
Class C Shares........................... 405 -- --
Custodian................................. 9,366 4,150 3,307
Legal..................................... 31,681 12,177 7,816
Transfer agent............................ 46,405 11,078 44,167
Other..................................... 57,163 28,026 23,717
---------- ---------- ----------
Total expenses before contractual fee
reductions.............................. 581,865 204,571 186,412
Contractual fee reductions............... (34,990) (10,640) (7,308)
---------- ---------- ----------
Net expenses............................... 546,875 193,931 179,104
---------- ---------- ----------
Net Investment Income (Loss)............... (68,678) 1,373,446 632,902
---------- ---------- ----------
Net Realized/Unrealized Gains (Losses) from
Investments:
Net realized gains/(losses) from
investment transactions.................. 3,894,750 (138,154) 76,849
Net realized gains from options
transactions............................. 70,830 -- --
Change in unrealized
appreciation/depreciation from investment
and options transactions................. (446,205) 375,749 407,634
---------- ---------- ----------
Net realized/unrealized gains from
investments and options.................. 3,519,375 237,595 484,483
---------- ---------- ----------
Change in net assets resulting from
operations................................ $3,450,697 $1,611,041 $1,117,385
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
HSBC Mutual Funds Trust
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Growth and Income Fund
----------------------------------
For the For the
six months ended year ended
June 30, 2000 December 31, 1999
---------------- -----------------
(Unaudited)
<S> <C> <C>
Investment Activities:
Operations:
Net investment income (loss)............... $ (68,678) $ 149,623
Net realized gains (losses) from investment
and options transactions.................. 3,965,580 12,129,768
Change in unrealized appreciation
(depreciation) from investments........... (446,205) 7,082,383
------------ ------------
Change in net assets resulting from
operations................................ 3,450,697 19,361,774
------------ ------------
Dividends:
From net investment income:
Class A Shares............................ -- (137,848)
Class B Shares*........................... -- (64)
Class C Shares*........................... -- (6)
From net realized gains from investment and
options transactions:
Class A Shares............................ -- (10,530,718)
Class B Shares*........................... -- (250,808)
Class C Shares*........................... -- (2,072)
------------ ------------
Change in net assets from shareholder
dividends................................. -- (10,921,516)
------------ ------------
Change in net assets from capital share
transactions.............................. (8,398,158) 6,316,652
------------ ------------
Change in net assets....................... (4,947,461) 14,756,910
------------ ------------
Net Assets:
Beginning of period........................ 121,023,850 106,266,940
------------ ------------
End of period.............................. $116,076,389 $121,023,850
============ ============
</TABLE>
--------
*Class B Shares and Class C Shares commenced operations on July 1, 1999.
See Notes to Financial Statements.
24
<PAGE>
HSBC Mutual Funds Trust
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Fixed Income Fund New York Tax-Free Bond Fund
---------------------------------- ----------------------------------
For the For the For the For the
six months ended year ended six months ended year ended
June 30, 2000 December 31, 1999 June 30, 2000 December 31, 1999
---------------- ----------------- ---------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment Activities:
Operations:
Net investment income
(loss)................ $ 1,373,446 $ 2,638,570 $ 632,902 $ 1,414,437
Net realized gains
(losses) from
investment and options
transactions.......... (138,154) (405,827) 76,849 (125,254)
Change in unrealized
appreciation
(depreciation) from
investments........... 375,749 (3,184,724) 407,634 (2,457,036)
----------- ------------ ----------- -----------
Change in net assets
resulting from
operations............ 1,611,041 (951,981) 1,117,385 (1,167,853)
----------- ------------ ----------- -----------
Dividends:
From net investment
income:
Class A Shares........ (1,373,446) (2,649,910) (626,358) (1,410,156)
Class B Shares*....... -- -- (6,544) (4,281)
In excess of net
investment income:
Class A Shares........ -- -- -- (18,944)
----------- ------------ ----------- -----------
Change in net assets
from shareholder
dividends............. (1,373,446) (2,649,910) (632,902) (1,433,381)
----------- ------------ ----------- -----------
Change in net assets
from capital share
transactions.......... 663,285 (7,879,139) (2,365,776) (2,599,702)
----------- ------------ ----------- -----------
Change in net assets... 900,880 (11,481,030) (1,881,293) (5,200,936)
----------- ------------ ----------- -----------
Net Assets:
Beginning of period.... 42,352,528 53,833,558 28,467,103 33,668,039
----------- ------------ ----------- -----------
End of period.......... $43,253,408 $ 42,352,528 $26,585,810 $28,467,103
=========== ============ =========== ===========
</TABLE>
--------
*Class B Shares and Class C Shares commenced operations on July 1, 1999.
See Notes to Financial Statements.
25
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements
June 30, 2000 (Unaudited)
1.Organization
HSBC Mutual Funds Trust (the "Trust") was organized 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. The accompanying financial statements are
for the Growth and Income Fund, Fixed Income Fund, and New York Tax-Free
Bond Fund (individually a "Fund," collectively the "Funds").
The Funds are authorized to issue three classes of shares as follows: Class
A Shares, Class B Shares, and Class C Shares. At June 30, 2000, the Fixed
Income Fund had not issued Class B Shares or Class C Shares and the New
York Tax-Free Bond Fund had not issued Class C Shares. Each class has
identical rights and privileges except with respect to the service
organization and distribution fees paid by each respective class, voting
matters affecting a single class of shares and the exchange privileges of
each class of shares.
2.Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies
are in conformity with generally accepted accounting principles in the
United States of America. The preparation of financial statements requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of income and expenses for the period. Actual
results could differ from those estimates.
Securities Valuation:
The value of each equity security is based either on the last sale price on
a national securities exchange, or in the absence of recorded sales, at the
closing bid prices on such exchanges, or at the quoted bid price in the
over-the-counter market. Securities or other assets for which market
quotations are not readily available are valued at fair value as determined
by the Funds' Board of Trustees.
Bonds and other fixed-income securities (other than short-term obligations
but including listed issues) are valued on the basis of valuations
furnished by a pricing service, the use of which has been approved by the
Funds' Board of Trustees. In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics other than
market data and without exclusive reliance upon quoted prices or exchanges
or over-the-counter prices, since such valuations are believed to reflect
more accurately the fair value of such securities. All debt securities with
a remaining maturity of 60 days or less are valued at amortized cost, which
approximates value. Under the amortized cost method, discount or premium,
if any, is accreted or amortized, respectively, on a constant (straight-
line) basis to the maturity of the security.
Security Transactions and Related Income:
Security transactions are recorded on the date the security is purchased or
sold ("trade date"). Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis and includes, where
26
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements (continued)
applicable, the amortization of premium or accretion of discount.
Securities gains and losses are calculated on the identified cost basis.
Expense Allocation:
Expenses directly attributed to each Fund in the Trust are charged to that
Fund's operations; expenses, which are applicable to all Funds, are
allocated among them on the basis of relative net assets or another
appropriate basis. Expenses specific to a class are charged to that class.
Options:
The Funds may purchase and write (sell) put and call options on securities,
currencies and indices of securities (collectively, an "underlying asset").
These transactions are to hedge against changes in interest rates, security
prices, currency fluctuations and other market developments, or for
purposes of earning additional income (i.e. speculation).
The risk associated with purchasing an option is that the Funds pay a
premium whether or not the option is exercised. Additionally, the Funds
bear the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased
are accounted for in the same manner as other securities owned. The cost of
securities acquired through the exercise of call options is increased by
the premiums paid. The proceeds from securities sold through the exercise
of put options are decreased by the premiums paid.
In writing an option, the Funds contract with a specified counter-party to
purchase (written put option) or sell (written call option) a specified
quantity (notional amount) of an underlying asset at a specified price
during a specified period upon demand of the counter-party. The risk
associated with writing an option is that the Funds bear the market risk of
an unfavorable change in the price of an underlying asset, and may be
required to buy or sell an underlying asset under the contractual terms of
the option at a price different from the current market value. Written
options involve financial risk which may exceed amounts reflected in the
accompanying financial statements.
The following is a summary of written call option activity for the six
months ended June 30, 2000, by the Growth and Income Fund:
<TABLE>
<CAPTION>
Call Options
-------------------
Number of
Contracts Premiums
--------- --------
<S> <C> <C>
Balance at beginning of year............................ 50 $ 26,724
Options written......................................... 1,396 591,580
Options closed.......................................... (1,286) (515,662)
------ ---------
Options outstanding at end of period.................... 160 $ 102,642
====== =========
</TABLE>
27
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements (continued)
Concentration of Credit Risk:
The New York Tax-Free Bond Fund invests primarily in debt obligations
issued by the State of New York and its respective political subdivisions,
agencies and public authorities to obtain funds for various public
purposes. The Fund is more susceptible to economic and political factors
adversely affecting issuers of New York specific municipal securities than
is a municipal bond fund that is not concentrated in these issuers to the
same extent.
Federal Income Taxes and Dividends:
Each Fund is a separate taxable entity for federal tax purposes. Each Fund
has qualified and intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code, as amended. The
Growth and Income Fund declares and pays, as a semi-annual dividend,
substantially all net investment income. The Fixed Income and New York Tax-
Free Bond Funds declare dividends from net investment income daily and pay
them monthly. Net realized gains for all three Funds, if any, are
distributed at least annually. Additional dividends are also made to the
Funds' shareholders to the extent necessary to avoid the federal excise tax
on certain undistributed income and net realized gains of regulated
investment companies. Accordingly, no provision for federal or excise tax
is required.
3.Related Party Transactions:
Investment Adviser:
The Trust retains HSBC Asset Management Americas Inc. to act as Investment
Adviser (the "Investment Adviser") for the Fund. The Investment Adviser is
the North American investment management affiliate of HSBC Holdings plc
(Hong Kong and Shanghai Banking Corporation). As compensation for its
services, the Investment Adviser is entitled to a fee accrued daily, and
paid monthly, at the following annual rates:
<TABLE>
<CAPTION>
Investment Advisory
Fee Rate
------------------------
Growth and Fixed Income
Based on Each Fund's Average Daily Net Assets Income Fund Fund
--------------------------------------------- ----------- ------------
<S> <C> <C>
Up to $400 million........................................ 0.550% 0.550%
In excess of $400 million but not exceeding $800 million.. 0.505% 0.505%
In excess of $800 million but not exceeding $1.2 billion.. 0.460% 0.460%
In excess of $1.2 billion but not exceeding $1.6 billion.. 0.415% 0.415%
In excess of $1.6 billion but not exceeding $2.0 billion.. 0.370% 0.370%
In excess of $2.0 billion................................. 0.315% 0.315%
</TABLE>
28
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Investment
Advisory Fee Rate
-----------------
New York
Tax-Free
Portion of the Fund's Average Daily Net Assets Bond Fund
---------------------------------------------- -----------------
<S> <C>
Up to $300 million........................................ 0.450%
In excess of $300 million but not exceeding $600 million.. 0.420%
In excess of $600 million but not exceeding $1.0 billion.. 0.385%
In excess of $1.0 billion but not exceeding $1.5 billion.. 0.350%
In excess of $1.5 billion but not exceeding $2.0 billion.. 0.315%
In excess of $2.0 billion................................. 0.280%
</TABLE>
Administrator:
BISYS Fund Services Ohio, Inc. ("BISYS"), a subsidiary of The BISYS Group,
Inc., with whom certain officers are affiliated, serves the Trust as
administrator. Such officers are not paid any fees directly by the Funds
for serving as officers of the Trust. In accordance with the terms of the
Management and Administration Agreement, BISYS is entitled to a fee accrued
daily, and paid monthly, at the following rate:
<TABLE>
<CAPTION>
Administration
Based on Each Fund's Average Daily Net Assets Fee Rate
--------------------------------------------- --------------
<S> <C>
Up to $200 million........................................... 0.150%
In excess of $200 million but not exceeding $400 million..... 0.125%
In excess of $400 million but not exceeding $600 million..... 0.100%
In excess of $600 million.................................... 0.080%
</TABLE>
Distribution Plan:
BISYS Fund Services Limited Partnership (the "Distributor") serves as
distributor of the Funds.
With respect to the Class A Shares, Class B Shares and Class C Shares the
Funds have adopted a Distribution Plan and Agreement (the "Plan") pursuant
to Rule 12b-1 of the 1940 Act. The Plan provides for a monthly payment by
the Fund to the Distributor for expenses incurred in connection with
distribution services provided to the Fund not to exceed an annual rate of
0.35% (0.50% for the Growth and Income Fund) of the average net assets for
Class A Shares, and 0.75% of the average net assets for Class B Shares and
Class C Shares. The Distributor is entitled to receive commissions on sales
of shares of the Funds. For the six months ended June 30, 2000, the total
commission the Distributor received, retained, and re-allowed to affiliated
broker/dealers of the Funds are as follow:
<TABLE>
<CAPTION>
Commissions
Commissions Reallowed to
Total Retained by Affiliated
Commissions the Distributor Broker/Dealer
----------- --------------- -------------
<S> <C> <C> <C>
Growth and Income Fund............ $19,477 $139 $19,338
Fixed Income Fund................. 2 -- 2
New York Tax-Free Bond Fund....... 8,147 -- 8,147
------- ---- -------
$27,626 $139 $27,487
======= ==== =======
</TABLE>
29
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements (continued)
Service Organization:
The Fund may enter into agreements (the "Service Agreements") with certain
banks, financial institutions and corporations ("Service Organizations")
whereby each Service Organization provides record-keeping and certain
administration services for its customers who invest in the Funds through
accounts maintained at that Service Organization. Each Service Organization
will receive monthly payments for the performance of its service under the
Service Agreement. The payments from the Funds on an annual basis will not
exceed 0.35% (Class A Shares) and 0.50% (Class B Shares and Class C Shares)
of the average daily net assets of the Funds' shares held in the sub-
accounts of the Service Organizations. During the six months ended June 30,
2000, the Class A Shares did not participate in any service agreement.
Fund Accountant, Transfer Agent, and Custodian:
BISYS provides fund accounting and transfer agent services for the Funds.
In addition, Bank of New York serves as custodian for the Funds. For these
services to the Funds, BISYS and Bank of New York receive an annual fee
accrued daily and paid monthly.
Legal Counsel:
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 six months ended June 30, 2000.
Fee Reductions:
Information regarding these transactions is as follows for the six months
ended June 30, 2000:
<TABLE>
<CAPTION>
Service Organization
Administration Fees Fees Contractually
Contractually Reduced Reduced
--------------------- --------------------
<S> <C> <C>
Growth and Income Fund........... $28,935 $6,055
Fixed Income Fund................ 10,640 --
New York Tax-Free Bond Fund...... 6,867 441
</TABLE>
4.Portfolio Securities:
Purchases and sales of securities (excluding short-term securities) for the
six months ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
Growth and Income Fund.............................. $38,062,751 $38,206,070
Fixed Income Fund................................... 13,934,557 13,470,067
New York Tax-Free Bond Fund......................... 1,329,008 5,303,304
</TABLE>
30
<PAGE>
HSBC Mutual Funds Trust
Notes to Financial Statements (continued)
5.Capital Share Transactions:
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. Transactions in
capital and shares of beneficial interest by class for the six months ended
June 30, 2000, were as follows:
<TABLE>
<CAPTION>
New York Tax-Free
Growth and Income Fund Fixed Income Fund Bond Fund
-------------------------- ------------------------- -------------------------
For the For the For the
Six Months For the Six Months For the Six Months For the
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
------------ ------------ ----------- ------------ ----------- ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Class A Shares:
Proceeds from shares
issued................. $ 3,746,467 $ 9,955,766 $ 2,234,280 $ 6,778,445 $ 438,242 $ 1,276,057
Dividends reinvested... -- 9,322,388 15,176 45,015 271,896 861,424
Cost of shares
redeemed............... (14,991,387) (16,362,843) (1,586,171) (14,702,599) (3,148,624) (5,139,821)
------------ ------------ ----------- ------------ ----------- -----------
Class A Shares capital
transactions........... (11,244,920) 2,915,311 663,285 (7,879,139) (2,438,486) (3,002,340)
------------ ------------ ----------- ------------ ----------- -----------
Class B Shares:
Proceeds from shares
issued................. 2,877,275 3,150,439 -- -- 243,704 403,571
Dividends reinvested... -- 250,838 -- -- 4,992 4,022
Cost of shares
redeemed............... (166,794) (24,436) -- -- (175,986) (4,955)
------------ ------------ ----------- ------------ ----------- -----------
Class B Shares capital
transactions........... 2,710,481 3,376,841 -- -- 72,710 402,638
------------ ------------ ----------- ------------ ----------- -----------
Class C Shares:
Proceeds from shares
issued................. 141,327 22,455 -- -- -- --
Dividends reinvested... -- 2,045 -- -- -- --
Cost of shares
redeemed............... (5,046) -- -- -- -- --
------------ ------------ ----------- ------------ ----------- -----------
Class C Shares capital
transactions........... 136,281 24,500 -- -- -- --
------------ ------------ ----------- ------------ ----------- -----------
Change in net assets
from capital
transactions........... $ (8,398,158) $ 6,316,652 $ 663,285 $ (7,879,139) $(2,365,776) $(2,599,702)
============ ============ =========== ============ =========== ===========
SHARE TRANSACTIONS:
Class A Shares:
Issued................. 251,877 684,171 232,806 685,707 40,596 111,664
Reinvested............. -- 646,833 1,583 4,510 25,284 76,461
Redeemed............... (1,011,975) (1,115,495) (165,199) (1,476,476) (291,525) (461,798)
------------ ------------ ----------- ------------ ----------- -----------
Change in Class A
Shares................. (760,098) 215,509 69,190 (786,259) (225,645) (273,673)
------------ ------------ ----------- ------------ ----------- -----------
Class B Shares:
Issued................. 194,301 216,842 -- -- 22,651 36,607
Reinvested............. -- 17,554 -- -- 464 372
Redeemed............... (11,511) (1,712) -- -- (16,404) (458)
------------ ------------ ----------- ------------ ----------- -----------
Change in Class B
Shares................. 182,790 232,684 -- -- 6,711 36,521
------------ ------------ ----------- ------------ ----------- -----------
Class C Shares:
Issued................. 9,787 1,426 -- -- -- --
Reinvested............. -- 142 -- -- -- --
Redeemed............... (349) -- -- -- -- --
------------ ------------ ----------- ------------ ----------- -----------
Change in Class C
Shares................. 9,438 1,568 -- -- -- --
------------ ------------ ----------- ------------ ----------- -----------
Change in shares from
share transactions..... (567,870) 449,761 69,190 (786,259) (218,934) (237,152)
============ ============ =========== ============ =========== ===========
</TABLE>
31
<PAGE>
HSBC Mutual Funds Trust
FINANCIAL HIGHLIGHTS
GROWTH AND INCOME FUND
Selected per share data for a share outstanding throughout each period
indicated.
<TABLE>
<CAPTION>
Class A Shares
---------------------------------------------------------------
For the
six months For the year ended December 31,
ended June 30, ----------------------------------------------
2000 1999 1998 1997 1996 1995
-------------- -------- -------- ------- -------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 14.92 $ 13.86 $ 12.36 $ 16.28 $ 14.77 $ 11.93
-------- -------- -------- ------- -------- -------
Investment Activities:
Net investment income
(loss)................ (0.01) 0.02 0.07 0.18 0.18 0.30
Net realized and
unrealized gains from
investment and options
transactions.......... 0.48 2.47 3.23 4.28* 2.46 3.64
-------- -------- -------- ------- -------- -------
Total from Investment
Activities............. 0.47 2.49 3.30 4.46 2.64 3.94
-------- -------- -------- ------- -------- -------
Dividends:
Net investment income.. -- (0.02) (0.08) (0.19) (0.18) (0.30)
Net realized gains from
investment and options
transactions.......... -- (1.41) (1.72) (8.19) (0.95) (0.80)
-------- -------- -------- ------- -------- -------
Total Dividends......... -- (1.43) (1.80) (8.38) (1.13) (1.10)
-------- -------- -------- ------- -------- -------
Net Asset Value, End of
Period................. $ 15.39 $ 14.92 $ 13.86 $ 12.36 $ 16.28 $ 14.77
======== ======== ======== ======= ======== =======
Total Return (excludes
sales charge).......... 3.15%(a) 18.48% 26.97% 27.42% 17.90% 33.11%
Ratios/Supplemental
Data:
Net assets at end of
period (000's)........ $109,570 $117,542 $106,267 $55,195 $140,688 $66,062
Ratio of expenses to
average net assets.... 0.90%(b) 0.88% 0.89% 0.83% 0.85% 0.94%
Ratio of net investment
income to average net
assets................ (0.08%)(b) 0.14% 0.58% 0.95% 1.43% 2.06%
Ratio of expenses to
average net assets**.. (c) 1.00% 1.01% 0.95% 0.96% 0.97%
Portfolio turnover***.. 32.90% 94.36% 82.19% 69.07% 61.68% 52.77%
</TABLE>
--------
(a) Not annualized.
(b) Annualized.
(c) For the six months ended June 30, 2000, there were no voluntary fee
reductions/reimbursements.
* In addition to the net realized and unrealized gains from investment
transactions, this amount includes a decrease in net asset value per
share resulting from the timing of issuances and redemptions of Fund
shares in relation to fluctuating market values for the portfolio.
** During the period, certain fees were contractually reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.
Ratios for periods prior to January 1, 2000 were calculated including
voluntary and contractual fee reductions/reimbursements. Starting with
the six months ended June 30, 2000, ratios are calculated using voluntary
reductions/reimbursements only.
*** Porfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
32
<PAGE>
HSBC Mutual Funds Trust
FINANCIAL HIGHLIGHTS
GROWTH AND INCOME FUND
Selected per share data for a share outstanding throughout each period
indicated.
<TABLE>
<CAPTION>
Class B Shares Class C Shares
--------------------------- ---------------------------
For the six For the period For the six For the period
months ended ended months ended ended
June 30, December 31, June 30, December 31,
2000 1999* 2000 1999*
------------ -------------- ------------ --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $14.86 $15.32 $14.86 $15.32
------ ------ ------ ------
Investment Activities:
Net investment (loss).. (0.06) (0.03) (0.06) (0.06)
Net realized and
unrealized gains from
investment and options
transactions.......... 0.46 0.98 0.45 1.01
------ ------ ------ ------
Total from Investment
Activities............. 0.40 0.95 0.39 0.95
------ ------ ------ ------
Dividends:
Net investment (loss).. -- (0.00)(c) -- (0.00)(c)
Net realized gains from
investment and options
transactions.......... -- (1.41) -- (1.41)
------ ------ ------ ------
Total Dividends......... -- (1.41) -- (1.41)
------ ------ ------ ------
Net Asset Value, End of
Period................. $15.26 $14.86 $15.25 $14.86
====== ====== ====== ======
Total Return (excludes
redemption charge)(a).. 2.69% 6.68% 2.62% 6.68%
Ratios/Supplemental
Data:
Net assets at end of
period (000's)........ $6,338 $3,459 $ 168 $ 23
Ratio of expenses to
average net
assets(b)............. 1.91% 1.77% 1.93% 1.72%
Ratio of net investment
income to average net
assets(b)............. (1.08%) (0.87)% (1.12%) (0.81)%
Ratio of expenses to
average net
assets**(b)........... (d) 2.13% (d) 2.07%
Portfolio turnover***.. 32.90% 94.36% 32.90% 94.36%
</TABLE>
--------
(a) Not annualized.
(b) Annualized.
(c) Less than $0.005 per share.
(d) For the six months ended June 30, 2000, there were no voluntary fee
reductions/reimbursements.
* Class B Shares & Class C Shares commenced offering on July 1, 1999.
** During the period, certain fees were contractually reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.
Ratios for periods prior to January 1, 2000 were calculated including
voluntary and contractual fee reductions/reimbursements. Starting with
the six months ended June 30, 2000, ratios are calculated using voluntary
reductions/reimbursements only.
*** Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
33
<PAGE>
HSBC Mutual Funds Trust
FINANCIAL HIGHLIGHTS
FIXED INCOME FUND
Selected per share data for a share outstanding throughout each period
indicated.
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------
For the
six months For the year ended December 31,
ended June 30, ---------------------------------------------
2000 1999 1998 1997 1996 1995
-------------- ------- ------- ------- -------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.61 $ 10.37 $ 10.12 $ 9.89 $ 10.28 $ 9.35
------- ------- ------- ------- -------- -------
Investment Activities:
Net investment income.. 0.31 0.57 0.57 0.59 0.59 0.59
Net realized and
unrealized
gains/(losses) from
investment
transactions.......... 0.06 (0.76) 0.25 0.23 (0.39) 0.93
------- ------- ------- ------- -------- -------
Total from Investment
Activities............. 0.37 (0.19) 0.82 0.82 0.20 1.52
------- ------- ------- ------- -------- -------
Dividends:
Net investment income.. (0.31) (0.57) (0.57) (0.59) (0.59) (0.59)
------- ------- ------- ------- -------- -------
Total Dividends......... (0.31) (0.57) (0.57) (0.59) (0.59) (0.59)
------- ------- ------- ------- -------- -------
Net Asset Value, End of
Period................. $ 9.67 $ 9.61 $ 10.37 $ 10.12 $ 9.89 $ 10.28
======= ======= ======= ======= ======== =======
Total Return (excludes
sales charge).......... 3.89%(a) (1.86%) 8.33% 8.62% 2.11% 16.73%
Ratios/Supplemental
Data:
Net assets at end of
period (000's)........ $43,253 $42,353 $53,834 $61,402 $104,875 $99,942
Ratio of expenses to
average net assets.... 0.91%(b) 0.92% 0.89% 0.88% 0.88% 0.93%
Ratio of net investment
income to average net
assets................ 6.46%(b) 5.70% 5.59% 6.00% 5.94% 6.03%
Ratio of expenses to
average net assets*... (c) 1.04% 1.01% 1.00% 0.98% 0.96%
Portfolio turnover..... 33.22% 75.75% 71.05% 60.98% 156.05% 41.58%
</TABLE>
--------
(a) Not annualized.
(b) Annualized.
(c) For the six months ended June 30, 2000, there were no voluntary fee
reductions/reimbursements.
* During the period, certain fees were contractually reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.
Ratios for periods prior to January 1, 2000 were calculated including
voluntary and contractual fee reductions/reimbursements. Starting with
the six months ended June 30, 2000, ratios are calculated using voluntary
reductions/reimbursements only.
See Notes to Financial Statements.
34
<PAGE>
HSBC Mutual Funds Trust
FINANCIAL HIGHLIGHTS
NEW YORK TAX-FREE BOND FUND
Selected per share data for a share outstanding throughout each period
indicated.
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------
For the six
months ended For the year ended December 31,
June 30, --------------------------------------------
2000 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.73 $ 11.64 $ 11.48 $ 11.05 $ 11.17 $ 10.20
------- ------- ------- ------- ------- -------
Investment Activities:
Net investment income.. 0.25 0.51 0.51 0.53 0.55 0.54
Net realized and
unrealized
gains/(losses) from
investment
transactions.......... 0.19 (0.91) 0.16 0.43 (0.12) 0.97
------- ------- ------- ------- ------- -------
Total from Investment
Activities............. 0.44 (0.40) 0.67 0.96 0.43 1.51
------- ------- ------- ------- ------- -------
Dividends:
Net investment income.. (0.25) (0.51) (0.51) (0.53) (0.55) (0.54)
------- ------- ------- ------- ------- -------
Total Dividends......... (0.25) (0.51) (0.51) (0.53) (0.55) (0.54)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 10.92 $ 10.73 $ 11.64 $ 11.48 $ 11.05 $ 11.17
======= ======= ======= ======= ======= =======
Total Return (excludes
sales charge).......... 4.13%(a) (3.58%) 5.99% 8.97% 3.99% 15.17%
Ratios/Supplemental
Data:
Net assets at end of
period (000's)........ $26,114 $28,075 $33,668 $37,524 $41,975 $50,677
Ratio of expenses to
average net assets.... 1.28%(b) 1.08% 0.96% 0.92% 0.91% 0.99%
Ratio of net investment
income to average net
assets................ 4.56%(b) 4.40% 4.47% 4.79% 5.02% 5.07%
Ratio of expenses to
average net assets*... (c) 1.31% 1.28% 1.24% 1.21% 1.20%
Portfolio turnover**... 5.01% 11.85% 56.81% 35.64% 87.40% 24.43%
</TABLE>
--------
(a) Not annualized.
(b) Annualized.
(c) For the six months ended June 30, 2000, there were no voluntary fee
reductions/reimbursements.
* During the period, certain fees were contractually reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.
Ratios for periods prior to January 1, 2000 were calculated including
voluntary and contractual fee reductions/reimbursements. Starting with
the six months ended June 30, 2000, ratios are calculated using voluntary
reductions/reimbursements only.
** Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
35
<PAGE>
HSBC Mutual Funds Trust
FINANCIAL HIGHLIGHTS
NEW YORK TAX-FREE BOND FUND
Selected per share data for a share outstanding throughout each period
indicated.
<TABLE>
<CAPTION>
Class B Shares
-------------------------
For the six
months ended Period ended
June 30, December 31,
2000 1999*
------------ ------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period................. $10.72 $11.21
------ ------
Investment Activities:
Net investment income............................... 0.20 0.19
Net realized and unrealized gains/(losses) from
investment transactions............................ 0.20 (0.49)
------ ------
Total from Investment Activities..................... 0.40 (0.30)
------ ------
Dividends:
Net investment income............................... (0.20) (0.19)
------ ------
Total Dividends...................................... (0.20) (0.19)
------ ------
Net Asset Value, End of Period....................... $10.92 $10.72
====== ======
Total Return (excludes redemption charge)(a)......... 3.75% (2.71%)
Ratios/Supplemental Data:
Net assets at end of period (000's)................. $ 472 $ 392
Ratio of expenses to average net assets(b).......... 2.20% 2.01%
Ratio of net investment income to average net
assets(b).......................................... 3.71% 3.37%
Ratio of expenses to average net assets**(b)........ (c) 2.35%
Portfolio turnover rate***.......................... 5.01% 11.85%
</TABLE>
--------
(a) Not annualized.
(b) Annualized.
(c) For the six months ended June 30, 2000, there were no voluntary fee
reductions/reimbursements.
* Class B Shares commenced offering on July 1, 1999.
** During the period, certain fees were contractually reduced. If such fee
reductions had not occurred, the ratios would have been as indicated.
Ratios for periods prior to January 1, 2000 were calculated including
voluntary and contractual fee reductions/reimbursements. Starting with
the six months ended June 30, 2000, ratios are calculated using voluntary
reductions/reimbursements only.
*** Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
36
<PAGE>
HSBC Mutual Funds Trust
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[LOGO OF HSBC ASSET MANAGEMENT
AMERICAS INC. APPEARS HERE]
--------------------------------------------------------------------------------
Growth and Income Fund
Fixed Income Fund
New York Tax-Free Bond 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 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 Funds 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.
8/00
Semi-Annual Report
June 30, 2000
Managed by:
HSBC Asset Management Americas Inc.
Sponsored and distributed by:
BISYS Fund Services
