-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WX5OrFPV4OloDavG+8Sw5BLxIclWtvGssay0eYXMgkqzUHN8wioJ1J58yRCQ4GL+ y1hUZtlNs7DjUyBDFvPY9A== 0000935069-97-000137.txt : 19970912 0000935069-97-000137.hdr.sgml : 19970912 ACCESSION NUMBER: 0000935069-97-000137 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HSBC MUTUAL FUNDS TRUST CENTRAL INDEX KEY: 0000861106 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06057 FILM NUMBER: 97675827 BUSINESS ADDRESS: STREET 1: 3435 STELZER ROAD STREET 2: SUITE1000 CITY: COLUMBUS STATE: OH ZIP: 43219-8001 BUSINESS PHONE: 6144708000 MAIL ADDRESS: STREET 1: 3435 STELZER ROAD STREET 2: SUITE 1000 CITY: COLUMBUS STATE: OH ZIP: 43219-8001 FORMER COMPANY: FORMER CONFORMED NAME: MARINER MUTUAL FUNDS TRUST DATE OF NAME CHANGE: 19920703 N-30D 1 HSBC INTERNATIONAL EQUITY SEMI-ANNUAL HSBC MUTUAL FUNDS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC Asset Management Americas Inc. [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- International Equity Fund SEMI-ANNUAL REPORT (UNAUDITED) June 30, 1997 Managed by: HSBC ASSET MANAGEMENT AMERICAS INC. Sponsored and distributed by: BISYS FUND SERVICES HSBC MUTUAL FUNDS TRUST - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- HSBC Asset Management Americas Inc. [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- July 11, 1997 Dear Shareholder: The HSBC International Equity Fund Service Class Shares gained 9.25% (without load and 3.76% with load) and the Institutional Shares gained 9.33% for the six months ended June 30, 1997. This compares to the return on the Morgan Stanley Capital International (MSCI) EAFE Index of 11.36%. The Fund benefitted from its country allocation during the first six months of 1997. Favoring Continental Europe over Asia was a positive for the Fund as the MSCI Europe Index rose 14.45%. In comparison the MSCI All Country Far East Free (ex-Japan) Index was up 2.10%. Further, favoring the Continental European Markets at the expense of the UK proved positive as the UK lagged many of its European Counterparts. The major factor detracting from performance was stock selection in Europe. The portfolio lagged the comparable market indices in Germany, France, the Netherlands and Spain. These markets account for 59% of the capitalization of the MSCI Europe (ex. UK) Index. MARKET REVIEW AND OUTLOOK - ------------------------- EUROPE: - ------- The MSCI Europe Index rose 14.45% for the first six months of 1997. The table below summarizes the MSCI Country returns. COUNTRY RETURN (IN U.S. DOLLAR) Belgium 11.87% Denmark 13.82 Finland 17.74 France 9.39 Germany 16.97 Ireland 4.64 Italy 11.63 Netherlands 20.38 Norway 5.83 Spain 21.12 Sweden 14.90 Switzerland 31.62 United Kingdom 9.23 There was a real dichotomy between the performance in the UK and on the continent. The UK had to digest a change to a labor government, fiscal tightening as a result of new budgets, a strong consumer and strength in manufacturing. On the continent, monetary ease was priced into the equity markets to help fuel economic growth. However, the need for monetary ease continued to conflict with the fiscal requirements of EMU. Strong growth is likely to continue in the UK. Real incomes are rising and consumers are benefitting from windfalls approaching 30 billion sterling equivalent to 5% of disposable income. The inflationary pressure remains benign with retail prices growing at a moderate 2.5%. With this positive outlook for the UK, we will maintain our exposure relative to the continent. We expect further volatility on the continent for the rest of 1997. We have already seen two surprises which have implications for EMU. First, in Germany, the pro-EMU government under Kohl stated it intended to revalue the Bundesbank's gold reserves in an attempt to bring Germany's budget deficit close to the 3% of GDP Maastricht limit. The second was the election of a socialist government in France. These types of surprises are likely to lead to increased volatility on the continent. After two years of strong performance, we are happy to reduce our exposure. ASIA: - ----- Asia can best be described as desynchronized. In the larger, more liquid markets (Japan, Hong Kong, Australia) there are signs of strong positive earnings momentum as these economies remain largely unaffected by a slowdown in demand from abroad. The rest of the region continues to suffer from an export slowdown with a corresponding cycle of earnings downgrades. Japan remains the most interesting story in the region. Economic recovery appears to be well in place and we believe it is sustaining against a backdrop of a large output gap. Monetary policy is expected to remain accommodative. The valuation of the market appears attractive on both absolute and relative terms. Consequently, we have increased our exposure to Japan by reducing Continental Europe. In summary, our goal continues to be to ensure the HSBC International Equity Fund is characterized by strong investment performance and solid client service. Thank you for choosing the HSBC International Equity Fund to be a part of your total investment program. Sincerely, [/S/ JAMESB. McHUGH] James B. McHugh 2 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN INTERNATIONAL EQUITY FUND VS. MSCI-EAFE - ----------------------------------------------------------------------- Total Return - Service Class Shares Institutional Class Shares - ----------------------------------------------------------------------- Inception Inception 1 Year (4/25/94) 1 Year (3/1/95) - ----------------------------------------------------------------------- Offering Price(1) 5.75% 3.08% 11.54% 12.49% NAV(2) 11.35% 4.77% 11.54% 12.49% - ----------------------------------------------------------------------- CHART [GRAPHIC OMITTED] Following are plot points for Chart: FUND(1) MSCI-EAFE FUND(2) 4/94 9,476 10,000 10,000 6/94 9,544 10,088 10,050 12/94 9,069 9,991 9,550 6/95 8,946 10,250 9,420 12/95 9,478 11,111 9,970 6/96 9,893 11,605 10,417 12/96 10,083 11,775 10,617 6/97 11,015 13,104 11,599 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE, WITHOUT CERTAIN FEE WAIVERS RETURN WOULD HAVE BEEN LOWER. THE FUND'S INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. (1) INCLUDES THE MAXIMUM SALES CHARGE OF 5.00% (2) EXCLUDES THE MAXIMUM SALES CHARGE OF 5.00% THE ABOVE ILLUSTRATION COMPARES A $10,000 INVESTMENT IN THE SERVICE CLASS SHARES OF THE INTERNATIONAL EQUITY FUND ON APRIL 25, 1994 (DATE OF INCEPTION), TO A $10,000 INVESTMENT IN THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PLEASE REFER TO THE BOX ABOVE FOR RETURNS ON INSTITUTIONAL CLASS SHARES, WHICH HAVE BEEN OFFERED SINCE MARCH 1, 1995. THE FUND'S PERFORMANCE TAKES INTO ACCOUNT ALL APPLICABLE FEES AND EXPENSES. THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF OVER 900 SECURITIES LISTED ON THE STOCK EXCHANGES OF THE FOLLOWING COUNTRIES IN EUROPE, AUSTRALIA, AND THE FAR EAST: AUSTRALIA, AUSTRIA, BELGIUM, DENMARK, FINLAND, FRANCE, HONG KONG, IRELAND, ITALY, JAPAN, MALAYSIA, NETHERLANDS, NEW ZEALAND. THIS INDEX IS A WIDELY ACCEPTED UNMANAGED INDEX OF OVERALL STOCK MARKET PERFORMANCE, AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. INTERNATIONAL INVESTING INVOLVES INCREASED RISKS AND VOLATILITY. 3 BOARD OF TRUSTEES JOHN P. PFANN* Chairman and President, JPP Equities, Inc. WOLFE J. FRANKL* Former Director-North America, Berlin Economic Development Corporation HARALD PAUMGARTEN President, Paumgarten and Company ROBERT A. ROBINSON* Trustee, Henrietta and B. Frederick H. Bugher Foundation *Member of the Audit and Nominating Committees - -------------------------------------------------------------------------------- OFFICERS MICHAEL J. KANE PRESIDENT ERIC F. ALMQUIST VICE PRESIDENT KAREN DOYLE VICE PRESIDENT KEVIN MARTIN TREASURER STEVEN R. HOWARD SECRETARY CURTIS BARNES ASSISTANT SECRETARY ALAINA V. METZ ASSISTANT SECRETARY ROBERT L. TUCH ASSISTANT SECRETARY 4 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS AUSTRALIA - --------- BANKING 24,273 Australia & New Zealand Bank Group......... $ 181,609 0.5% ----------- ----- BROADCASTING 46,670 News Corp., Ltd............................ 223,970 0.6 ----------- ----- CONGLOMERATES 21,275 CSR Ltd.................................... 82,483 0.2 ----------- ----- FOOD & BEVERAGES 27,148 SouthCorp Holdings Ltd..................... 101,765 0.3 ----------- ----- METALS (NON-FERROUS) 12,251 WMC Holdings Ltd........................... 77,310 0.2 ----------- ----- PETROLEUM SERVICES 21,852 Broken Hill Proprietary Co., Ltd........... 321,755 0.8 ----------- ----- TRUCKING & FREIGHT FORWARDING 13,400 Mayne Nickless Ltd......................... 78,181 0.2 ----------- ----- TOTAL AUSTRALIA............................ 1,067,073 2.8 ----------- ----- (COST - $999,853) AUSTRIA - ------- ENERGY 1,000 OMV AG..................................... 128,096 0.3 ----------- ----- TOTAL AUSTRIA.............................. 128,096 0.3 ----------- ----- (COST - $106,790) BELGIUM - ------- BANKING 1,100 Credit Communal de Belgique SA............. 118,163 0.3 ----------- ----- TOTAL BELGIUM.............................. 118,163 0.3 ----------- ----- (COST - $102,564) FINLAND - ------- CONGLOMERATES 2,350 Nokia AB, Class A.......................... 175,546 0.5 ----------- ----- TOTAL FINLAND.............................. 175,546 0.5 ----------- ----- (COST - $138,243) FRANCE - ------ AUTO PARTS 2,400 Valeo...................................... 149,063 0.4 ----------- ----- BANKING 4,600 Credit Commercial de France................ 194,905 0.5 ----------- ----- BROADCASTING 700 Canal Plus................................. 136,267 0.4 ----------- ----- BUSINESS SERVICES 1,400 Compagnie Generale des Eaux................ 179,386 0.5 ----------- ----- CONGLOMERATES 2,120 Lafarge SA................................. 131,853 0.4 ----------- ----- CONSTRUCTION MATERIALS 780 Lafarge Coppee SA.......................... 48,512 0.1 ----------- -----
5 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) FRANCE(continued) - ------ DRUGS & HEALTHCARE 1,900 Societe Elf Sanofi SA....................... $ 186,227 0.5% ----------- ----- ELECTRONICS 2,000 SGS Thomson Microelectronics(b)............. 157,912 0.4 ----------- ----- FINANCIAL SERVICES 954 Compagnie Bancaire.......................... 121,752 0.3 ----------- ----- INSURANCE 2,750 Axa SA...................................... 171,036 0.5 ----------- ----- PETROLEUM SERVICES 2,300 Total Francaise Petroleum................... 232,477 0.6 ----------- ----- RETAIL-SPECIALTY 370 Carrefour................................... 268,715 0.7 ----------- ----- TIRES & RUBBER 3,500 Michelin.................................... 210,177 0.5 ----------- ----- TOTAL FRANCE................................. 2,188,282 5.9 ----------- ----- (COST - $1,984,773) GERMANY - ------- APPAREL & TEXTILES 1,100 Adidas AG................................... 121,725 0.3 ----------- ----- AUTOMOBILES 330 Bayerische Motoren Werke AG................. 273,029 350 Volkswagen AG............................... 268,305 ----------- ----- 541,334 1.4 ----------- ----- BANKING 12,300 Commerzbank AG.............................. 348,386 0.9 ----------- ----- CHEMICALS 4,750 BASF AG..................................... 175,527 4,400 Bayer AG.................................... 169,077 1,300 SGL Carbon AG............................... 177,994 ----------- ----- 522,598 1.4 ----------- ----- INDUSTRIAL MACHINERY 600 Mannesmann AG............................... 267,301 0.7 ----------- ----- INSURANCE 1,600 Allianz AG.................................. 334,843 0.9 ----------- ----- UTILITIES-GAS & ELECTRIC 4,550 Veba AG..................................... 255,662 0.7 ----------- ----- TOTAL GERMANY............................... 2,391,849 6.3 ----------- ----- (COST - $2,077,900) HONG KONG - --------- BANKING 42,204 Bank of East Asia 175,957 33,000 China Resources EN 161,863 33,000 Dao Heng Bank Group Ltd. 180,605 ----------- ----- 518,425 1.4 ----------- -----
6 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED)
HSBC INTERNATIONAL EQUITY FUND SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) HONG KONG(continued) - -------- CONGLOMERATES 40,000 Hutchison Whampoa............................ $ 345,927 0.9% ----------- ----- REAL ESTATE 29,000 Cheung Kong Holdings......................... 286,358 18,000 Sun Hung Kai Properties Ltd.................. 216,656 ----------- ----- 503,014 1.3 ----------- ----- TELEPHONE 58,200 Hong Kong Telecommunications................. 138,977 0.4 ----------- ----- TOTAL HONG KONG.............................. 1,506,343 4.0 ----------- ----- (COST - $1,265,094) IRELAND - ------- BANKING 3,741 Bank of Ireland.............................. 41,063 0.1 ----------- ----- PAPER 45,000 Jefferson Smurfit Group PLC.................. 130,810 0.3 ----------- ----- TOTAL IRELAND................................ 171,873 0.4 ----------- ----- (COST - $161,849) ITALY - ----- INSURANCE 15,700 Assicurazioni Generali SPA................... 285,443 0.7 ----------- ----- TELEPHONE 48,700 Telecom Italia Mobile SPA.................... 157,599 55,000 Telecom Italia SPA........................... 177,339 ----------- ----- 334,938 0.9 ----------- ----- TOTAL ITALY.................................. 620,381 1.6 ----------- ----- (COST - $514,713) JAPAN - ----- BANKING 22,000 Bank of Tokyo - Mitsubishi................... 441,459 16,000 Dai-ichi Kangyo Bank......................... 217,763 65,000 Long-Term Credit Bank of Japan............... 280,710 22,000 Nomura Securities Investment Co.............. 303,263 16,000 Sanwa Bank................................... 237,306 15,000 Sumitomo Bank................................ 246,030 25,000 Sumitomo Trust & Banking..................... 268,278 ----------- ----- 1,994,809 5.2 ----------- ----- BREWERIES 3,000 Kirin Brewery Co............................. 31,146 36,000 Sapporo Breweries............................ 299,005 ----------- ----- 330,151 0.9 ----------- -----
7 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) JAPAN(continued) - ----- BUSINESS SERVICES 5,000 Secom........................................ $ 366,864 1.0% ----------- ----- CHEMICALS 52,000 Asahi Chemical Industries Co., Ltd........... 310,766 0.8 ----------- ----- COMPUTERS 19,000 Ricoh Co., Ltd............................... 248,648 0.7 ----------- ----- CONGLOMERATES 24,000 Mitsubishi Estate Co......................... 347,583 0.9 ----------- ----- DRUGS & HEALTHCARE 23,000 KAO Corp..................................... 319,054 0.8 ----------- ----- ELECTRICAL EQUIPMENT 36,000 Hitachi...................................... 402,024 12,000 Omron Corp................................... 254,406 ----------- ----- 656,430 1.7 ----------- ----- ELECTRONICS 8,000 Murata Mfg. Co............................... 318,269 3,000 Rohm Co...................................... 308,847 ----------- ----- 627,116 1.6 ----------- ----- HOMEBUILDERS 37,000 Obayashi Corp................................ 247,592 0.6 ----------- ----- HOUSEHOLD APPLIANCES & FURNISHINGS 3,600 Sony Corp.................................... 313,767 0.8 ----------- ----- INDUSTRIAL MACHINERY 8,000 Fuji Machine Manufacturing................... 289,653 33,000 Juken Sangyo Co.............................. 233,205 44,000 Mitsubishi Heavy Industries Ltd.............. 337,428 ----------- ----- 860,286 2.3 ----------- ----- INSURANCE 22,000 Tokio Marine & Fire Insurance Co., ADR....... 287,908 0.8 ----------- ----- INTERNATIONAL OIL 60,000 Cosmo Oil Co., Ltd........................... 286,861 0.8 ----------- ----- PAPER 55,000 Nippon Paper Industries...................... 318,138 0.8 ----------- ----- PHARMACEUTICALS 14,000 Sankyo Co., Ltd.............................. 470,250 1.2 ----------- ----- PHOTOGRAPHY 9,000 Fuji Photo Film Co........................... 361,979 6,200 Noritsu Koki Co., Ltd. 305,619 ----------- ----- 667,598 1.8 ----------- -----
8 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) JAPAN(continued) - ----- RETAIL TRADE 6,400 Familymart Co. ............................... $ 313,802 3,000 Ito Yokado Co. ............................... 174,053 39,000 Mitsui and Co. ............................... 374,280 ----------- ----- 862,135 2.3% ----------- ----- STEEL 115,000 Nippon Steel Corp. ........................... 367,213 1.0 ----------- ----- TRANSPORTATION 110,000 Mitsui O.S.K. Lines Ltd. ..................... 226,488 0.6 ----------- ----- TELECOMMUNICATION SERVICES 47 Nippon Telegraph & Telephone Corp. ........... 451,056 1.2 ----------- ----- TOTAL JAPAN .................................. 10,560,713 27.8 ----------- ----- (COST - $9,443,652) MALAYSIA - -------- BANKING 22,000 Malayan Bank Berhad .......................... 230,983 38,000 DCB Holdings Berhad-WTS ...................... 120,444 ----------- ----- 351,427 0.9 ----------- ----- CAPITAL GOODS 15,000 Unlimited Engineers Berhad ................... 108,162 0.3 . ----------- ----- CONSUMER SERVICES 38,000 Magnum Corp. Berhad .......................... 57,211 0.2 ----------- ----- TOTAL MALAYSIA ............................... 516,800 1.4 ----------- ----- (COST - $545,251) NETHERLANDS - ----------- CONSUMER NON-DURABLES 2,150 Koninklijke Ahold NV ......................... 181,385 2,400 Gucci Group NV ............................... 156,503 ----------- ----- 337,888 0.9 ----------- ----- FINANCIAL SERVICES 8,000 Internationale Nederlanden Group NV .......... 368,842 1.0 ----------- ----- PETROLEUM SERVICES 9,200 Royal Dutch Petroleum Co. NV ................. 478,537 1.3 ----------- ----- TELECOMMUNICATION SERVICES 17,000 Elsevier NV .................................. 284,069 0.7 ----------- ----- TOTAL NETHERLANDS ............................ 1,469,336 3.9 ----------- ----- (COST - $1,228,339)
9 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) SINGAPORE - --------- APPAREL & TEXTILES 41,000 Wing Tai Holdings ........................... $ 118,151 0.3% ----------- ----- BANKING 24,000 Overseas Chinese Bank ....................... 248,444 0.7 ----------- ----- TOTAL SINGAPORE ............................. 366,595 1.0 ----------- ----- (COST - $372,949) SPAIN - ----- BANKING 1,100 Banco Popular Espanol ....................... 269,494 0.7 ----------- ----- CONSUMER NON-DURABLES 7,995 Centros Com Pryca ........................... 173,085 0.5 ----------- ----- PETROLEUM SERVICES 3,000 Repsol SA ................................... 126,841 0.3 ----------- ----- TELECOMMUNICATION SERVICES 5,900 Telefonica de Espana ........................ 170,573 0.4 ----------- ----- TOTAL SPAIN ................................. 739,993 1.9 ----------- ----- (COST - $635,440) SWEDEN - ------ CONSUMER BASICS 12,000 Astra AB .................................... 223,386 0.6 ----------- ----- FOREST PRODUCTS 10,000 Stora Kopparbergsl AB ....................... 162,885 0.4 ----------- ----- RETAIL TRADE 6,000 Hennes and Mauritz .......................... 210,975 0.6 ----------- ----- TELECOMMUNICATION SERVICES 6,800 Telelfonaktiebolaget LM Ericsson ............ 267,675 0.7 ----------- ----- TOTAL SWEDEN ................................ 864,921 2.3 ----------- ----- (COST - $672,348) SWITZERLAND - ----------- BANKING 2,000 CS Holdings ................................. 256,849 0.7 ----------- ----- DRUGS & HEALTHCARE 130 Ares-Serono Group SA ........................ 188,322 340 Novartis AG ................................. 543,534 40 Roche Holdings AG Genusscheine .............. 361,781 ----------- ----- 1,093,637 2.9 ----------- ----- ELECTRICAL EQUIPMENT 180 ABB AG ...................................... 272,466 0.7 ----------- ----- FOOD & BEVERAGES 140 Nestle SA ................................... 184,685 0.5 ----------- -----
10 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS (continued) SWITZERLAND(continued) - ----------- INSURANCE 130 Schweitzer Ruckversicher .................... $ 183,870 0.4% ----------- ----- TOTAL SWITZERLAND ........................... 1,991,507 5.2 ----------- ----- (COST - $1,611,366) UNITED KINGDOM - -------------- AIR TRAVEL 45,000 British Airways PLC ......................... 512,954 1.4 ----------- ----- BANKING 8,259 Bank of Ireland ............................. 90,775 39,000 National Westminster Bank PLC ............... 524,445 26,384 Standard Chartered PLC ...................... 402,466 ----------- ----- 1,017,686 2.7 ----------- ----- CHEMICALS 26,337 BOC Group PLC ............................... 457,669 1.2 ----------- ----- ELECTRICAL EQUIPMENT 61,000 General Electric Co. PLC .................... 364,684 1.0 ----------- ----- CONSUMER BASICS 43,000 B.A.T. Industries PLC ....................... 384,893 33,000 Scot & Newcastle ............................ 355,009 ----------- ----- 739,902 2.0 ----------- ----- CONSUMER NON-DURABLES 34,953 Next ........................................ 394,645 1.0 ----------- ----- DRUGS & HEALTHCARE 33,999 SmithKline Beecham PLC ...................... 625,918 1.7 ----------- ----- FINANCE 39,343 Grand Metropolitan Capital Corp. ............ 378,694 1.0 ----------- ----- HOTELS & RESTAURANTS 72,000 Ladbroke Group PLC .......................... 282,968 0.7 ----------- ----- INDUSTRIAL MACHINERY 18,000 GKN PLC ..................................... 308,747 0.8 ----------- ----- INSURANCE 65,000 Norwich Union PLC(b) ........................ 344,218 0.9 ----------- ----- INTERNATIONAL OIL 50,319 British Petroleum Co. PLC ................... 625,958 1.6 ----------- ----- METALS (NON-FERROUS) 18,000 RTZ Corp. PLC ............................... 313,693 0.8 ----------- ----- TELEPHONE 97,342 Vodafone Group PLC .......................... 474,964 1.2 ----------- ----- WATER AND WASTEWATER TREATMENT 33,000 Thames Water PLC ............................ 379,189 1.0 ----------- ----- TOTAL UNITED KINGDOM ........................ 7,221,889 19.0 ----------- ----- (COST - $6,439,594) TOTAL COMMON STOCKS ......................... 32,099,360 84.5 ----------- ----- (COST - $28,300,718)
11 SCHEDULE OF PORTFOLIO INVESTMENTS AS OF JUNE 30, 1997 (UNAUDITED) (CONTINUED) HSBC INTERNATIONAL EQUITY FUND
SHARES OR COUNTRY/ PRINCIPAL MARKET PERCENT OF INDUSTRY AMOUNT SECURITY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ REPURCHASE AGREEMENTS $4,724,000 State Street Bank (Purchased on 6/30/97, proceeds at maturity $4,724,525; (Collateralized by $4,760,000 U.S. Treasury Notes, 5.13%, 2/28/98, market value $4,903,155) ............... $ 4,724,000 12.4% ----------- ----- TOTAL REPURCHASE AGREEMENTS (COST - $4,724,000) ................... 4,724,000 12.4 ----------- ----- TOTAL INVESTMENTS ........................ 36,823,360 97.0 ----- (COST - $33,024,718) OTHER ASSETS IN EXCESS OF LIABILITIES ........................... 1,157,024 3.0 ----------- ----- NET ASSETS ............................... $37,980,384 100.0% =========== ===== - ------------- (a) Represents cost for federal income tax purposes and differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation ............................................................. $4,036,178 Unrealized depreciation ............................................................. (237,536) ---------- Net unrealized appreciation ......................................................... $3,798,642 ========== (b) Represents non-income producing security. ADR - American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS. 12 STATEMENT OF ASSETS AND LIABILITIES AS OF JUNE 30, 1997 (UNAUDITED)
INTERNATIONAL EQUITY FUND ASSETS: Investment in securities, at value (cost $33,024,718) ......................................... $36,823,360 Cash .......................................................................................... 520 Foreign currency (cost $878,077) .............................................................. 873,887 Interest and dividends receivable ............................................................. 78,937 Receivable for investments sold ............................................................... 270,609 Deferred organization costs ................................................................... 15,294 Foreign tax receivable ........................................................................ 48,337 Prepaid expenses and other assets ............................................................. 685 ----------- Total Assets ................................................................................ 38,111,629 ----------- LIABILITIES: Payable for investments purchased ............................................................. 103,038 Foreign withholding tax payable ............................................................... 10,163 Accrued expenses and other payables: Administration fees ......................................................................... 4,482 Custodian fees .............................................................................. 74,002 Transfer agent fees ......................................................................... 6,013 Legal and audit fees ........................................................................ 4,292 Printing fees ............................................................................... 11,316 Other ....................................................................................... 7,939 ----------- Total Liabilities ........................................................................ 221,245 ----------- Net Assets ....................................................................................... $37,890,384 =========== COMPUTATION OF NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: SERVICE CLASS SHARES Net assets .................................................................................... $ 381,115 Shares of beneficial interest issued and outstanding ($.001 par value per share, unlimited number of shares authorized) ........................................................ 32,899 ----------- Net asset value and redemption price per share ................................................ $ 11.58 Maximum sales charge-5.00% of offering price .................................................. 0.61 ----------- Maximum offering price ........................................................................ $ 12.19 =========== INSTITUTIONAL CLASS SHARES Net assets ....................................................................................... $37,509,269 Shares of beneficial interest issued and outstanding ($.001 par value per share, unlimited number of shares authorized) ........................................................ 3,234,919 ----------- Net asset value, offering price and redemption price per share ................................... $ 11.60 =========== COMPOSITION OF NET ASSETS: Paid-in capital ............................................................................... $33,457,730 Undistributed net investment income ........................................................... 139,880 Accumulated undistributed net realized gains from investment and foreign currency transactions ........................................................... 499,750 Net unrealized appreciation from investments and foreign currency transactions ................ 3,793,024 ----------- Net Assets, June 30, 1997 ..................................................................... $37,890,384 ===========
SEE NOTES TO FINANCIAL STATEMENTS 13 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INTERNATIONAL EQUITY FUND INVESTMENT INCOME: Dividends (net of foreign withholding tax of $39,901) ........................................... $ 279,749 Interest ........................................................................................ 39,779 ---------- Total Income .................................................................................. 319,528 ---------- EXPENSES: Advisory fees ................................................................................... 117,940 Administration fees ............................................................................. 19,721 Co-administration fees .......................................................................... 9,203 Audit fees ...................................................................................... 3,847 Transfer agent fees ............................................................................. 25,435 Custodian fees .................................................................................. 97,557 Printing costs .................................................................................. 12,132 Registration fees ............................................................................... 4,480 Amortization of organization costs .............................................................. 4,611 Legal fees ...................................................................................... 3,328 Trustees' fees .................................................................................. 3,967 Other expenses .................................................................................. 4,696 ---------- Gross Expenses ..................................................................................... 306,917 Less: Fee waivers ............................................................................... (133,760) ---------- Net Expenses ....................................................................................... 173,157 ---------- Net Investment Income .............................................................................. 146,371 ---------- REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: Net realized gains (losses) on investments ......................................................... 1,894,449 Net realized gains (losses) on foreign currency transactions ....................................... (1,049,410) ---------- Net realized gains (losses) from investments and foreign currency transactions .................. 845,039 ---------- Net change in unrealized appreciation/depreciation on investments .................................. 2,233,618 Net change in unrealized gains (losses) on other assets and liabilities denominated in foreign currencies ............................................................... (2,300) ---------- Net change in unrealized appreciation/depreciation from investments and foreign currency transactions ................................................................. 2,231,318 ---------- Net Realized and Unrealized Gains (Losses) from Investments ........................................ 3,076,357 ---------- Net Increase in Net Assets Resulting from Operations ............................................... $3,222,728 ==========
SEE NOTES TO FINANCIAL STATEMENTS. 14 STATEMENT OF CHANGES IN NET ASSETS INTERNATIONAL EQUITY FUND
FOR THE SIX MONTHS ENDED FOR THE JUNE 30, 1997 YEAR ENDED (UNAUDITED) DECEMBER 31, 1996 ------------- ----------------- From Investment Activities: OPERATIONS: Net investment income (loss) ........................................... $ 146,371 $ (18,907) Net realized gains (losses) from investments and foreign currency transactions ........................................ 845,039 492,258 Net change in unrealized appreciation/depreciation from investments and foreign currency transactions ........................ 2,231,318 741,037 ----------- ----------- Change in net assets resulting from operations ............................................ 3,222,728 1,214,388 ----------- ----------- CAPITAL TRANSACTIONS: Proceeds from shares issued ............................................ 14,257,487 8,010,945 Dividends reinvested ................................................... -- -- Cost of shares redeemed ................................................ (1,099,059) (3,626,499) ----------- ----------- Change in net assets from share transactions ........................... 13,158,428 4,384,446 ----------- ----------- Change in net assets ...................................................... 16,381,156 5,598,834 NET ASSETS: Beginning of period .................................................... 21,509,228 15,910,394 ----------- ----------- End of period .......................................................... $37,890,384 $21,509,228 =========== =========== SHARE TRANSACTIONS: Issued ................................................................. 1,344,438 788,991 Reinvested ............................................................. -- -- Redeemed ............................................................... (103,702) (355,941) ----------- ----------- Change in shares .......................................................... 1,240,736 433,050 =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS. 15 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION HSBC Mutual Funds Trust, (the "Trust") was organized in Massachusetts on November 1, 1989 as a Massachusetts business trust, and is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as a diversified, open-end management investment company with multiple investment portfolios. The accompanying financial statements and notes relate only to the International Equity Fund ("the Fund"). The Fund offers two classes of shares: Institutional Shares and Service Shares. The Institutional Class is available to customers of financial institutions or corporations on behalf of their customers or employees, or on behalf of any trust, pension, profit-sharing or other benefit plan for such customers or employees. The Service Class is available to all other investors. The Institutional Class Shares and Service Class Shares are identical in all respects except that Institutional Class Shares are not subject to a sales load or the imposition of any shareholder servicing fees or Rule 12b-1 fees. The Fund's investment objective is to seek to provide investors with long-term capital appreciation by investing at least 80% of its total assets in equity securities (including American and European Depositary Receipts) issued by companies based outside of the United States. The balance of the Fund's assets will be invested in equity and debt securities of companies based in the United States and outside of the United States including bonds and money market instruments. The Fund may also use other investment practices to enhance return or to hedge against fluctuations in the value of portfolio securities. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION: Investments in securities are valued at the last quoted sale price as of the close of business on the day the valuation is made, or if a sale is not reported for that day, at the mean between closing bid and asked prices. Price information for listed securities is taken from the exchange where the securities are primarily traded. Investments in futures and related options, which are traded on commodities exchanges, are valued at their last sale price as of the close of such exchanges. Other securities for which no quotations are readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees. Short-term investments having maturities of 60 days or less are valued at amortized cost, which approximates market value. All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at the bid price of such currencies against the U.S. dollar's last quoted price by a major bank or broker. If such quotations are not available as of the close of the New York Stock Exchange, the rate of exchange will be determined in accordance with policies established in good faith by the Board of Trustees. FOREIGN CURRENCIES: Transactions denominated in foreign currencies are recorded at the prevailing rate of exchange as incurred or earned. Asset and liability accounts are adjusted to reflect the current rate at the end of each period. Such adjustments are recorded in net unrealized appreciation of other assets and liabilities denominated in foreign currencies. Net realized foreign currency gains or losses include exchange rate differences between trade date and settlement date for security purchases and sales, and between the date the 16 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund records income, expenses and other assets and liabilities and the date such assets and liabilities are received or paid. The portion of both realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed. The Fund may enter into forward foreign currency exchange contracts for investment purposes and to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings and to hedge certain firm purchase and sales commitments denominated in foreign currencies. A forward foreign currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions. Fluctuations in the value of forward foreign currency exchange contracts are recorded for financial reporting purposes as unrealized gains or losses by the Fund until settlement date. The Fund's custodian will place cash or liquid high grade debt securities into a segregated account of the Fund in an amount equal to the value of the Fund's total assets committed to the consummation of forward foreign exchange contracts requiring the Fund to purchase foreign currency of foreign exchange contracts entered into for non-hedging purposes. If the value of the securities placed in the segregated account declines, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of the Fund's commitments with respect to such contracts. Risks may arise from the potential inability of a counter party to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars reflects the total exposure the Fund has in that particular currency contract. No outstanding forward foreign currency exchange contracts existed as of June 30, 1997. TAXES: It is the Fund's policy to comply with the requirements of the Internal Revenue Code, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income, and net realized capital gains, if any, to its shareholders. Therefore, no provision is required for federal income tax. Under the applicable foreign tax law, a withholding tax may be imposed on interest, dividends and capital gains earned on foreign investments at various rates. Where available, the Fund will file for claims on foreign taxes withheld. At December 31, 1996, the International Equity Fund had available $272,287 of capital loss carryforwards which, if not utilized, will expire in the year 2003. DIVIDENDS AND DISTRIBUTIONS: The Fund intends to distribute substantially all of its net investment income and net realized capital gains, if any, annually in the form of dividends. The amounts of dividends from net investment income and of distributions from net realized gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. 17 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Dividends and distributions to shareholders which exceed net investment income and net realized capital gains for financial reporting purposes but not for tax purposes are reported as dividends in excess of net investment income or distributions in excess of net realized gains. To the extent they exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. SECURITY TRANSACTIONS AND RELATED INCOME: Security transactions are recorded on trade date. Identified cost of investments sold is used for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned. EXPENSE ALLOCATION: Expenses directly attributed to each Fund in the Trust are charged to that Fund's operations; expenses which are applicable to all Funds are allocated among them on the basis of relative net assets or another appropriate basis. ORGANIZATIONAL COSTS: Costs incurred in connection with the organization of the Fund have been deferred and are being amortized on a straight-line basis over a five year period beginning on the date operations commenced. 3. PORTFOLIO SECURITIES Purchases and sales of securities (excluding short-term securities) for the six months ended June 30, 1997 were $21,988,049 and $13,373,724, respectively. 4. RELATED PARTY TRANSACTIONS The Trust retains HSBC Asset Management Americas Inc. to act as Investment Adviser for the Fund. HSBC Asset Management Americas Inc. is the North American investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai Banking Corporation). As Investment Adviser, HSBC Asset Management Americas Inc. furnishes investment guidance and policy direction in connection with the management of the portfolio of the Fund, subject to policies established by the Board of Trustees. As compensation for its services, HSBC Asset Management Americas Inc. is paid a monthly advisory fee at an annual rate of 0.90% of the Fund's average daily net assets. For the six months ended June 30, 1997, HSBC Asset Management Americas Inc. earned advisory fees of $117,940, all of which was waived. The Adviser retains HSBC Asset Management Europe Ltd., HSBC Asset Management Hong Kong Ltd., HSBC Asset Management (Japan) and HSBC Asset Management Australia Ltd. to act as sub-advisers (the "Sub-Advisers") to the Fund. HSBCAsset Management Europe Ltd., HSBCAsset Management Hong Kong Ltd., HSBCAsset Management (Japan) and HSBCAsset Management Australia Ltd. are all investment advisory affiliates of HSBC Americas. Under its Sub-Advisory Contract with HSBC Asset Management Americas Inc., each Sub-Advisor will undertake at its own expense to furnish the Fund and HSBC Asset Management Americas Inc. with micro- and macroeconomics research, advice and recommendations, and economic and statistical data, with respect to the Fund's investments, subject to the overall review by HSBC Asset Management Americas Inc. and the Board of Trustees. BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"), an Ohio limited partnership is a subsidiary of The BISYS Group, Inc. BISYS, with whom certain officers of the Trust are affiliated, serves the Trust as distributor, administrator and transfer agent. Such officers are not paid any fees directly by the Funds for serving as officers of the Trust. 18 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. RELATED PARTY TRANSACTIONS (CONTINUED) In accordance with the terms of the Administration agreement, BISYS is paid a monthly fee equal to an annual rate of 0.15% of the Fund's average daily net assets. For the six months ended June 30, 1997, BISYS earned $13,104 in administrative services fees, net of fee waivers of $6,617. HSBC Asset Management Americas Inc. earned co-administration/shareholder servicing fees of up to 0.07% of the Fund's average net assets totaling $9,203 from the Fund for the six months ended June 30, 1997, all of which was waived. The Fund has adopted a Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 of the 1940 Act with respect to Service Shares of the Fund. The Service Class Plan provides for a monthly payment by the Fund to BISYS for expenses incurred in connection with distribution services provided to the Fund not to exceed an annual rate of 0.35% of the Fund's average net assets. The Fund did not incur any expenses with regard to the Plan for the six months ended June 30, 1997. The Fund may enter into agreements (the "Service Agreements") with certain banks, financial institutions and corporations ("Service Organizations") whereby each Service Organization handles record-keeping and provides certain administration services for its customers who invest in the Fund through accounts maintained at that Service Organization. Each Service Organization will receive monthly payments for the performance of its service under the Service Agreement. The payments from the Fund on an annual basis will not exceed 0.35% of the average value of the Funds' shares held in the subaccounts of the Service Organizations. A partner of Baker & McKenzie, legal counsel to the Trust, serves as Secretary of the Trust. For the six months ended June 30, 1997 the Fund incurred legal fees of $3,328. 5. CAPITAL SHARE TRANSACTIONS Transactions in capital shares for the Fund were as follows:
FOR THE SIX MONTHS ENDED JUNE 30, 1997 FOR THE YEAR ENDED (UNAUDITED) DECEMBER 31, 1996 -------------------------- --------------------------- AMOUNT SHARES AMOUNT SHARES ----------- --------- ----------- --------- SERVICE CLASS SHARES: Shares issued $ 4,902 465 $ 63,618 6,253 Shares redeemed (64,817) (6,144) (344,943) (33,612) ----------- --------- ----------- -------- Net decrease $ (59,915) (5,679) $ (281,325) (27,359) =========== ========= =========== ======== INSTITUTIONAL CLASS SHARES: Shares issued $14,252,585 1,343,973 $ 7,947,327 782,738 Shares redeemed (1,034,242) (97,558) (3,281,556) (322,329) ----------- --------- ----------- -------- Net increase $13,218,343 1,246,415 $ 4,665,771 460,409 =========== ========= =========== ========
19 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. SUBSEQUENT EVENTS Effective July 1, 1997, BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS") became the fund accountant for the Fund. These services were previously provided by State Street Bank and Trust Company. Also effective July 1, 1997, Bank of New York became the custodian for the Fund. These services were also previously provided by State Street Bank and Trust Company. 20 FINANCIAL HIGHLIGHTS SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR AND PERIODS INDICATED HSBC INTERNATIONAL EQUITY FUND
SERVICE CLASS SHARES ------------------------------------------------------------------ FOR THE SIX FOR THE FOR THE FOR THE PERIOD MONTHS ENDED YEAR ENDED YEAR ENDED APRIL 25, 1994(a) JUNE 30, 1997 DECEMBER 31, DECEMBER 31, TO DECEMBER 31, (UNAUDITED) 1996 1995 1994 -------------- ------------ ------------ ----------------- Net Asset Value, Beginning of Period .......... $ 10.60 $ 9.97 $9.55 $ 10.00 ------- -------- ----- ------- Investment Operations:** Net investment income (loss) ..................... 0.05 (0.02) (0.07) -- Net realized and unrealized gains (losses) from investments ................ 0.93 0.65 0.49 (0.43) ------- -------- ----- ------- Total from Investment Operations ................. 0.98 0.63 0.42 (0.43) ------- -------- ----- ------- Distributions In excess of net realized gains on investments ....... -- -- -- (0.02) ------- -------- ----- ------- Net Change in Net Asset Value .............. 0.98 0.63 0.42 (0.45) ------- -------- ----- ------- Net Asset Value, End of Period ................ $ 11.58 $ 10.60 $9.97 $ 9.55 ======= ======== ===== ======= Total Return(b) ................. 9.25%(d) 6.32% 4.40% (4.30)%(d) Ratios/Supplemental Data: Net Assets at end of period (000) ............... $ 381 $ 409 $ 658 $16,819 Ratio of expenses to average net assets ......... 1.34%(c) 2.10% 1.98% 2.16%(c) Ratio of net investment income (loss) to average net assets ................. 0.90%(c) (0.19)% (1.01)% (0.04)%(c) Ratio of expenses to average net assets* ........ 2.36%(c) 2.94% 3.66% 2.50%(c) Ratio of net investment income (loss) to average net assets* ................ 0.12%(c) (1.03)% (2.69)% (0.39)%(c) Portfolio turnover rate(e) ... 53.41% 77.91% 90.31% 29.37%(d) Average commission rate paid(f) ............... $0.0005 $0.0006 -- --
INSTITUTIONAL CLASS SHARES ----------------------------------------------------- FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED FOR THE PERIOD JUNE 30, 1997 DECEMBER 31, MARCH 1, 1995(a) TO (UNAUDITED) 1996 DECEMBER 31, 1995 ------------- ------------ ------------------- Net Asset Value, Beginning of Period .......... $ 10.61 $ 9.98 $ 8.81 ------- ------ ------- Investment Operations:** Net investment income (loss) ..................... 0.05 (0.01) (0.03) Net realized and unrealized gains (losses) from investments ................ 0.94 0.64 1.20 ------- ------ ------- Total from Investment Operations ................. 0.99 0.63 1.17 ------- ------ ------- Distributions In excess of net realized gains on investments ....... -- -- -- ------- ------ ------- Net Change in Net Asset Value .............. 0.99 0.63 1.17 ------- ------ ------- Net Asset Value, End of Period ................ $ 11.60 $10.61 $ 9.98 ======= ====== ======= Total Return(b) ................. 9.33%(d) 6.31% 13.28%(d) Ratios/Supplemental Data: Net Assets at end of period (000) ............... $37,509 $21,100 $15,253 Ratio of expenses to average net assets ......... 1.32%(c) 2.04% 2.62%(c) Ratio of net investment income (loss) to average net assets ................. 1.12%(c) (0.10)% (0.34)%(c) Ratio of expenses to average net assets* ........ 2.34%(c) 2.89% 3.12%(c) Ratio of net investment income (loss) to average net assets* ................ 0.10%(c) (0.95)% (0.84)%(c) Portfolio turnover rate(e) ... 53.41% 77.91% 91.31%(d) Average commission rate paid(f) ............... $0.0005 $0.0006 -- - --------------- * During the period certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and expense reimbursements had not occurred, the ratios would have been as indicated. ** Based on average shares outstanding. (a) Commencement of operations. (b) Excludes sales charge. (c) Annualized. (d) Not annualized. (e) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. (f) Represents the total dollar amount of commissions paid on portfolio transactions divided by total number of portfolio shares purchased and sold for which commissions were charged. Disclosure is not required for periods prior to September 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS. 21 [This page intentionally left blank.] HSBC(SERVICE MARK) MUTUAL FUNDS TRUST 3435 Stelzer Road Columbus, Ohio 43219 INFORMATION: (800) 634-2536 INVESTMENT ADVISER HSBC Asset Management Americas Inc. 250 Park Avenue New York, New York 10177 DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT BISYS Fund Services 3435 Stelzer Road Columbus, Ohio 43219 CUSTODIAN State Street Bank and Trust Company P.O. Box 1713 Boston, Massachusetts 02105 INDEPENDENT AUDITORS Ernst & Young LLP 787 Seventh Avenue New York, New York 10019 LEGAL COUNSEL Baker & McKenzie 805 Third Avenue New York, New York 10022 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. 8/97 -----END PRIVACY-ENHANCED MESSAGE-----