-----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, BlftoQfliQklPvtHjYSg6cmwEsyJ1fLQdBok2oZe89aSWdVLsvBJGRgndWMSx9Eg BV96nIUmSOy+Ef0GP/EWfg== 0001004726-99-000082.txt : 19990302 0001004726-99-000082.hdr.sgml : 19990302 ACCESSION NUMBER: 0001004726-99-000082 CONFORMED SUBMISSION TYPE: NSAR-B PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990301 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: NSAR-B SEC ACT: SEC FILE NUMBER: 811-06057 FILM NUMBER: 99553464 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 NSAR-B 1 N-SAR (3.0.A) PAGE 1 000 B000000 12/31/98 000 C000000 0000861106 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 N 000 H000000 N 000 I000000 3.0.a 000 J000000 A 001 A000000 HSBC MUTUAL FUNDS TRUST 001 B000000 811-6057 001 C000000 8006342536 002 A000000 3435 STELZER ROAD 002 B000000 COLUMBUS 002 C000000 OH 002 D010000 43219 003 000000 N 004 000000 N 005 000000 N 006 000000 N 007 A000000 Y 007 B000000 4 007 C010100 1 007 C020100 GROWTH & INCOME FUND 007 C030100 N 007 C010200 2 007 C020200 NEW YORK TAX-FREE BOND FUND 007 C030200 N 007 C010300 3 007 C010400 4 007 C010500 5 007 C010600 6 007 C020600 FIXED INCOME FUND 007 C030600 N 007 C010700 7 007 C010800 8 007 C010900 9 007 C020900 INTERNATIONAL EQUITY FUND 007 C030900 N 007 C011000 10 007 C011100 11 007 C011200 12 007 C011300 13 007 C011400 14 007 C011500 15 007 C011600 16 007 C011700 17 007 C011800 18 007 C011900 19 007 C012000 20 010 A00AA01 BISYS FUND SERVICES PAGE 2 010 C01AA01 COLUMBUS 010 C02AA01 OH 010 C03AA01 43219 010 A00AA02 HSBC ASSET MANAGEMENT AMERICAS, INC. 010 C01AA02 NEW YORK 010 C02AA02 NY 010 C03AA02 10177 011 A00AA01 BISYS FUND SERVICES 011 B00AA01 8-34626 011 C01AA01 COLUMBUS 011 C02AA01 OH 011 C03AA01 43219 012 A00AA01 BISYS FUND SERVICES 012 B00AA01 85-00000 012 C01AA01 COLUMBUS 012 C02AA01 OH 012 C03AA01 43219 013 A00AA01 ERNST & YOUNG LLP 013 B01AA01 NEW YORK 013 B02AA01 NY 013 B03AA01 10019 014 A00AA01 MARINE MIDLAND SECURITIES, INC. 014 B00AA01 8-34626 015 A00AA01 BANK OF NEW YORK 015 B00AA01 C 015 C01AA01 NEW YORK 015 C02AA01 NY 015 C03AA01 10286 015 E01AA01 X 018 00AA00 Y 019 A00AA00 Y 019 B00AA00 8 019 C00AA00 HSBCMUTUAL 020 A000001 MORGAN STANLEY & CO., INC. 020 B000001 13-2655998 020 C000001 50 020 A000002 PAINEWEBBER INC. 020 B000002 13-2638166 020 C000002 46 020 A000003 DONALDSON, LUFKIN & JENRETTE SECURITIES 020 B000003 13-2741729 020 C000003 29 020 A000004 CS FIRST BOSTON CORP. 020 B000004 13-5659485 020 C000004 22 020 A000005 SBC WARBURG 020 C000005 18 020 A000006 MERRILL LYNCH & CO., INC. 020 B000006 13-5674085 020 C000006 20 020 A000007 SALOMON, SMITH BARNEY, INC. 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LAWRENCE INC. 022 B000003 13-2730828 022 C000003 26467 022 D000003 36803 022 A000004 LEHMAN BROTHERS INC. 022 B000004 13-2518466 022 C000004 14118 022 D000004 11606 022 A000005 FIRST ALBANY 022 C000005 7311 022 D000005 11293 022 A000006 FED FUND 022 B000006 25-1203925 022 C000006 6001 022 D000006 6457 022 A000007 BANK OF NEW YORK 022 B000007 13-5160382 022 C000007 7347 022 D000007 4869 022 A000008 BEAR, STEARNS SECURITIES CORP. 022 B000008 13-3299429 022 C000008 10169 022 D000008 1237 022 A000009 MERRILL LYNCH & CO., INC. 022 B000009 13-5674085 022 C000009 6914 022 D000009 1220 022 A000010 RAYMOND, JAMES & ASSOCIATES, INC. 022 C000010 578 022 D000010 6470 023 C000000 717949 023 D000000 299113 026 A000000 N PAGE 4 026 B000000 N 026 C000000 N 026 D000000 Y 026 E000000 N 026 F000000 N 026 G010000 N 026 G020000 N 026 H000000 N 027 000000 Y 034 00AA00 N 035 00AA00 0 036 B00AA00 0 037 00AA00 N 038 00AA00 0 039 00AA00 N 040 00AA00 Y 041 00AA00 Y 054 A00AA00 N 054 B00AA00 N 054 C00AA00 N 054 D00AA00 N 054 E00AA00 N 054 F00AA00 N 054 G00AA00 N 054 H00AA00 N 054 I00AA00 N 054 J00AA00 N 054 K00AA00 N 054 L00AA00 N 054 M00AA00 N 054 N00AA00 N 054 O00AA00 N 077 A000000 Y 077 B000000 N 077 C000000 N 077 D000000 N 077 E000000 N 077 F000000 N 077 G000000 N 077 H000000 N 077 I000000 N 077 J000000 N 077 K000000 N 077 L000000 N 077 M000000 N 077 N000000 N 077 O000000 N 077 P000000 N 077 Q010000 Y 077 Q020000 N 077 Q030000 N PAGE 5 078 000000 N 080 C00AA00 2 081 A00AA00 Y 081 B00AA00 1 082 B00AA00 0 083 B00AA00 0 084 B00AA00 0 008 A000101 HSBC ASSET MANAGEMENT INC. 008 B000101 A 008 C000101 801-25999 008 D010101 NEW YORK 008 D020101 NY 008 D030101 10177 024 000100 Y 025 A000101 MORGAN STANLEY & CO., INC. 025 B000101 13-2655998 025 C000101 E 025 D000101 348 025 D000102 0 025 D000103 0 025 D000104 0 025 D000105 0 025 D000106 0 025 D000107 0 025 D000108 0 028 A010100 5515 028 A020100 4555 028 A030100 0 028 A040100 1008 028 B010100 1022 028 B020100 0 028 B030100 0 028 B040100 1816 028 C010100 281 028 C020100 0 028 C030100 0 028 C040100 634 028 D010100 283 028 D020100 2 028 D030100 0 028 D040100 1236 028 E010100 394 028 E020100 0 028 E030100 0 028 E040100 282 028 F010100 1138 028 F020100 6421 028 F030100 0 028 F040100 678 028 G010100 8633 028 G020100 10978 PAGE 6 028 G030100 0 028 G040100 5654 028 H000100 71 029 000100 Y 030 A000100 3 030 B000100 5.00 030 C000100 1.00 031 A000100 1 031 B000100 0 032 000100 2 033 000100 0 042 A000100 0 042 B000100 0 042 C000100 0 042 D000100 0 042 E000100 0 042 F000100 0 042 G000100 0 042 H000100 0 043 000100 0 044 000100 0 045 000100 Y 046 000100 N 047 000100 Y 048 000100 0.000 048 A010100 400000 048 A020100 0.550 048 B010100 400000 048 B020100 0.505 048 C010100 400000 048 C020100 0.460 048 D010100 400000 048 D020100 0.415 048 E010100 400000 048 E020100 0.370 048 F010100 0 048 F020100 0.000 048 G010100 0 048 G020100 0.000 048 H010100 0 048 H020100 0.000 048 I010100 0 048 I020100 0.000 048 J010100 0 048 J020100 0.000 048 K010100 2000000 048 K020100 0.315 049 000100 N 050 000100 N 051 000100 N 052 000100 N PAGE 7 053 A000100 Y 053 B000100 Y 053 C000100 N 055 A000100 N 055 B000100 N 056 000100 Y 057 000100 N 058 A000100 N 059 000100 Y 060 A000100 Y 060 B000100 Y 061 000100 1000 062 A000100 N 062 B000100 0.0 062 C000100 0.0 062 D000100 0.0 062 E000100 0.0 062 F000100 0.0 062 G000100 0.0 062 H000100 0.0 062 I000100 0.0 062 J000100 0.0 062 K000100 0.0 062 L000100 0.0 062 M000100 0.0 062 N000100 0.0 062 O000100 0.0 062 P000100 0.0 062 Q000100 0.0 062 R000100 0.0 063 A000100 0 063 B000100 0.0 066 A000100 Y 066 E000100 Y 067 000100 N 068 A000100 N 068 B000100 N 069 000100 N 070 A010100 Y 070 A020100 N 070 B010100 Y 070 B020100 N 070 C010100 N 070 C020100 N 070 D010100 Y 070 D020100 N 070 E010100 N 070 E020100 N 070 F010100 Y 070 F020100 N 070 G010100 Y PAGE 8 070 G020100 N 070 H010100 Y 070 H020100 N 070 I010100 N 070 I020100 N 070 J010100 Y 070 J020100 N 070 K010100 Y 070 K020100 Y 070 L010100 Y 070 L020100 N 070 M010100 N 070 M020100 N 070 N010100 Y 070 N020100 N 070 O010100 Y 070 O020100 N 070 P010100 N 070 P020100 N 070 Q010100 N 070 Q020100 N 070 R010100 N 070 R020100 N 071 A000100 84649 071 B000100 75294 071 C000100 91615 071 D000100 82 072 A000100 12 072 B000100 22 072 C000100 1353 072 D000100 0 072 E000100 0 072 F000100 518 072 G000100 141 072 H000100 0 072 I000100 49 072 J000100 20 072 K000100 0 072 L000100 20 072 M000100 21 072 N000100 8 072 O000100 0 072 P000100 0 072 Q000100 4 072 R000100 9 072 S000100 79 072 T000100 0 072 U000100 0 072 V000100 0 072 W000100 88 072 X000100 957 PAGE 9 072 Y000100 112 072 Z000100 530 072AA000100 9103 072BB000100 0 072CC010100 13103 072CC020100 0 072DD010100 531 072DD020100 0 072EE000100 12217 073 A010100 0.0700 073 A020100 0.0000 073 B000100 1.2700 073 C000100 0.0000 074 A000100 1 074 B000100 0 074 C000100 0 074 D000100 0 074 E000100 0 074 F000100 106442 074 G000100 0 074 H000100 0 074 I000100 0 074 J000100 0 074 K000100 0 074 L000100 95 074 M000100 7 074 N000100 106545 074 O000100 0 074 P000100 60 074 Q000100 0 074 R010100 0 074 R020100 0 074 R030100 48 074 R040100 170 074 S000100 0 074 T000100 106267 074 U010100 7664 074 U020100 0 074 V010100 13.86 074 V020100 0.00 074 W000100 0.0000 074 X000100 947 074 Y000100 0 075 A000100 0 075 B000100 94412 076 000100 0.00 008 A000201 HSBC ASSET MANAGEMENT AMERICAS INC. 008 B000201 A 008 C000201 801-25999 008 D010201 NEW YORK 008 D020201 NY PAGE 10 008 D030201 10177 024 000200 N 028 A010200 84 028 A020200 72 028 A030200 0 028 A040200 670 028 B010200 301 028 B020200 73 028 B030200 0 028 B040200 372 028 C010200 122 028 C020200 73 028 C030200 0 028 C040200 165 028 D010200 82 028 D020200 71 028 D030200 0 028 D040200 238 028 E010200 111 028 E020200 73 028 E030200 0 028 E040200 433 028 F010200 93 028 F020200 69 028 F030200 0 028 F040200 711 028 G010200 793 028 G020200 431 028 G030200 0 028 G040200 2589 028 H000200 647 029 000200 Y 030 A000200 21 030 B000200 4.75 030 C000200 1.00 031 A000200 19 031 B000200 0 032 000200 2 033 000200 0 042 A000200 0 042 B000200 0 042 C000200 0 042 D000200 100 042 E000200 0 042 F000200 0 042 G000200 0 042 H000200 0 043 000200 56 044 000200 0 045 000200 Y 046 000200 N PAGE 11 047 000200 Y 048 000200 0.000 048 A010200 300000 048 A020200 0.450 048 B010200 300000 048 B020200 0.420 048 C010200 400000 048 C020200 0.385 048 D010200 500000 048 D020200 0.350 048 E010200 500000 048 E020200 0.315 048 F010200 0 048 F020200 0.000 048 G010200 0 048 G020200 0.000 048 H010200 0 048 H020200 0.000 048 I010200 0 048 I020200 0.000 048 J010200 0 048 J020200 0.000 048 K010200 2000000 048 K020200 0.280 049 000200 N 050 000200 N 051 000200 N 052 000200 N 053 A000200 Y 053 B000200 Y 053 C000200 N 055 A000200 N 055 B000200 N 056 000200 Y 057 000200 N 058 A000200 N 059 000200 Y 060 A000200 Y 060 B000200 Y 061 000200 1000 062 A000200 Y 062 B000200 0.0 062 C000200 0.0 062 D000200 0.0 062 E000200 0.0 062 F000200 0.0 062 G000200 0.0 062 H000200 0.0 062 I000200 0.0 062 J000200 0.0 062 K000200 0.0 PAGE 12 062 L000200 0.0 062 M000200 0.0 062 N000200 0.0 062 O000200 98.5 062 P000200 0.0 062 Q000200 0.0 062 R000200 0.3 063 A000200 0 063 B000200 8.6 064 A000200 Y 064 B000200 N 066 A000200 N 067 000200 N 068 A000200 N 068 B000200 N 069 000200 N 070 A010200 Y 070 A020200 N 070 B010200 N 070 B020200 N 070 C010200 N 070 C020200 N 070 D010200 N 070 D020200 N 070 E010200 N 070 E020200 N 070 F010200 N 070 F020200 N 070 G010200 N 070 G020200 N 070 H010200 N 070 H020200 N 070 I010200 N 070 I020200 N 070 J010200 Y 070 J020200 N 070 K010200 Y 070 K020200 Y 070 L010200 N 070 L020200 N 070 M010200 N 070 M020200 N 070 N010200 Y 070 N020200 N 070 O010200 Y 070 O020200 N 070 P010200 N 070 P020200 N 070 Q010200 N 070 Q020200 N 070 R010200 N PAGE 13 070 R020200 N 071 A000200 19484 071 B000200 21774 071 C000200 34297 071 D000200 57 072 A000200 12 072 B000200 1888 072 C000200 16 072 D000200 0 072 E000200 0 072 F000200 159 072 G000200 53 072 H000200 0 072 I000200 87 072 J000200 7 072 K000200 0 072 L000200 9 072 M000200 6 072 N000200 1 072 O000200 0 072 P000200 0 072 Q000200 6 072 R000200 4 072 S000200 30 072 T000200 56 072 U000200 0 072 V000200 0 072 W000200 31 072 X000200 449 072 Y000200 113 072 Z000200 1568 072AA000200 805 072BB000200 0 072CC010200 0 072CC020200 300 072DD010200 1568 072DD020200 0 072EE000200 0 073 A010200 0.5100 073 A020200 0.0000 073 B000200 0.0000 073 C000200 0.0000 074 A000200 0 074 B000200 0 074 C000200 0 074 D000200 0 074 E000200 0 074 F000200 33266 074 G000200 0 074 H000200 0 074 I000200 0 PAGE 14 074 J000200 0 074 K000200 0 074 L000200 565 074 M000200 3 074 N000200 33834 074 O000200 0 074 P000200 18 074 Q000200 0 074 R010200 0 074 R020200 0 074 R030200 0 074 R040200 148 074 S000200 0 074 T000200 33668 074 U010200 2891 074 U020200 0 074 V010200 11.64 074 V020200 0.00 074 W000200 0.0000 074 X000200 947 074 Y000200 0 075 A000200 0 075 B000200 35044 076 000200 0.00 008 A000601 HSBC ASSET MANAGEMENT AMERICAS INC. 008 B000601 A 008 C000601 801-25999 008 D010601 NEW YORK 008 D020601 NY 008 D030601 10177 024 000600 N 028 A010600 965 028 A020600 5 028 A030600 0 028 A040600 384 028 B010600 313 028 B020600 4 028 B030600 0 028 B040600 1264 028 C010600 135 028 C020600 5 028 C030600 0 028 C040600 120 028 D010600 654 028 D020600 4 028 D030600 0 028 D040600 53 028 E010600 483 028 E020600 4 028 E030600 0 028 E040600 67 PAGE 15 028 F010600 330 028 F020600 4 028 F030600 0 028 F040600 1399 028 G010600 2880 028 G020600 26 028 G030600 0 028 G040600 3287 028 H000600 5 029 000600 Y 030 A000600 0 030 B000600 4.75 030 C000600 1.00 031 A000600 0 031 B000600 0 032 000600 0 033 000600 0 042 A000600 0 042 B000600 0 042 C000600 0 042 D000600 0 042 E000600 0 042 F000600 0 042 G000600 0 042 H000600 0 043 000600 0 044 000600 0 045 000600 Y 046 000600 N 047 000600 Y 048 000600 0.000 048 A010600 400000 048 A020600 0.550 048 B010600 400000 048 B020600 0.505 048 C010600 400000 048 C020600 0.460 048 D010600 400000 048 D020600 0.415 048 E010600 400000 048 E020600 0.370 048 F010600 0 048 F020600 0.000 048 G010600 0 048 G020600 0.000 048 H010600 0 048 H020600 0.000 048 I010600 0 048 I020600 0.000 048 J010600 0 048 J020600 0.000 PAGE 16 048 K010600 2000000 048 K020600 0.315 049 000600 N 050 000600 N 051 000600 N 052 000600 N 053 A000600 Y 053 B000600 Y 053 C000600 N 055 A000600 Y 055 B000600 N 056 000600 Y 057 000600 N 058 A000600 N 059 000600 Y 060 A000600 Y 060 B000600 Y 061 000600 1000 062 A000600 Y 062 B000600 0.0 062 C000600 0.0 062 D000600 0.0 062 E000600 0.0 062 F000600 0.0 062 G000600 0.0 062 H000600 0.0 062 I000600 0.0 062 J000600 0.0 062 K000600 0.0 062 L000600 0.0 062 M000600 10.8 062 N000600 24.2 062 O000600 9.0 062 P000600 54.4 062 Q000600 0.7 062 R000600 0.4 063 A000600 0 063 B000600 8.1 064 A000600 Y 064 B000600 N 066 A000600 N 067 000600 N 068 A000600 N 068 B000600 N 069 000600 N 070 A010600 Y 070 A020600 N 070 B010600 N 070 B020600 N 070 C010600 Y 070 C020600 N PAGE 17 070 D010600 N 070 D020600 N 070 E010600 Y 070 E020600 N 070 F010600 N 070 F020600 N 070 G010600 N 070 G020600 N 070 H010600 N 070 H020600 N 070 I010600 N 070 I020600 N 070 J010600 Y 070 J020600 N 070 K010600 Y 070 K020600 Y 070 L010600 Y 070 L020600 Y 070 M010600 N 070 M020600 N 070 N010600 Y 070 N020600 N 070 O010600 Y 070 O020600 N 070 P010600 N 070 P020600 N 070 Q010600 N 070 Q020600 N 070 R010600 N 070 R020600 N 071 A000600 38647 071 B000600 46458 071 C000600 54393 071 D000600 71 072 A000600 12 072 B000600 3599 072 C000600 49 072 D000600 0 072 E000600 0 072 F000600 310 072 G000600 85 072 H000600 0 072 I000600 31 072 J000600 7 072 K000600 0 072 L000600 14 072 M000600 13 072 N000600 3 072 O000600 0 072 P000600 0 072 Q000600 4 PAGE 18 072 R000600 5 072 S000600 47 072 T000600 0 072 U000600 0 072 V000600 0 072 W000600 49 072 X000600 568 072 Y000600 67 072 Z000600 3147 072AA000600 1275 072BB000600 0 072CC010600 91 072CC020600 0 072DD010600 3147 072DD020600 0 072EE000600 0 073 A010600 0.5700 073 A020600 0.0000 073 B000600 0.0000 073 C000600 0.0000 074 A000600 0 074 B000600 0 074 C000600 0 074 D000600 0 074 E000600 0 074 F000600 53550 074 G000600 0 074 H000600 0 074 I000600 0 074 J000600 0 074 K000600 0 074 L000600 642 074 M000600 4 074 N000600 54196 074 O000600 0 074 P000600 36 074 Q000600 0 074 R010600 0 074 R020600 0 074 R030600 0 074 R040600 326 074 S000600 0 074 T000600 53834 074 U010600 5191 074 U020600 0 074 V010600 10.37 074 V020600 0.00 074 W000600 0.0000 074 X000600 947 074 Y000600 0 075 A000600 0 PAGE 19 075 B000600 56323 076 000600 0.00 008 A000901 HSBC ASSET MANAGEMENT AMERICAS INC. 008 B000901 A 008 C000901 801-25999 008 D010901 NEW YORK 008 D020901 NY 008 D030901 10177 008 A000902 DELAWARE INTERNATIONAL ADVISERS LTD. 008 B000902 S 008 C000902 801-37702 008 D010902 LONDON 008 D050902 UNITED KINGDOM 008 D060902 EC2V 6EE 024 000900 N 028 A010900 12339 028 A020900 1 028 A030900 0 028 A040900 349 028 B010900 441 028 B020900 0 028 B030900 0 028 B040900 742 028 C010900 942 028 C020900 0 028 C030900 0 028 C040900 1627 028 D010900 521 028 D020900 0 028 D030900 0 028 D040900 1824 028 E010900 181 028 E020900 0 028 E030900 0 028 E040900 1226 028 F010900 349 028 F020900 242 028 F030900 0 028 F040900 650 028 G010900 14773 028 G020900 243 028 G030900 0 028 G040900 6418 028 H000900 2 029 000900 Y 030 A000900 0 030 B000900 5.00 030 C000900 1.00 031 A000900 0 031 B000900 0 032 000900 0 PAGE 20 033 000900 0 042 A000900 0 042 B000900 0 042 C000900 0 042 D000900 0 042 E000900 0 042 F000900 0 042 G000900 0 042 H000900 0 043 000900 0 044 000900 0 045 000900 Y 046 000900 N 047 000900 Y 048 000900 0.900 048 A010900 0 048 A020900 0.000 048 B010900 0 048 B020900 0.000 048 C010900 0 048 C020900 0.000 048 D010900 0 048 D020900 0.000 048 E010900 0 048 E020900 0.000 048 F010900 0 048 F020900 0.000 048 G010900 0 048 G020900 0.000 048 H010900 0 048 H020900 0.000 048 I010900 0 048 I020900 0.000 048 J010900 0 048 J020900 0.000 048 K010900 0 048 K020900 0.000 049 000900 N 050 000900 N 051 000900 N 052 000900 N 053 A000900 Y 053 B000900 Y 053 C000900 N 055 A000900 Y 055 B000900 N 056 000900 Y 057 000900 N 058 A000900 N 059 000900 Y 060 A000900 Y PAGE 21 060 B000900 Y 061 000900 1000 062 A000900 N 062 B000900 0.0 062 C000900 0.0 062 D000900 0.0 062 E000900 0.0 062 F000900 0.0 062 G000900 0.0 062 H000900 0.0 062 I000900 0.0 062 J000900 0.0 062 K000900 0.0 062 L000900 0.0 062 M000900 0.0 062 N000900 0.0 062 O000900 0.0 062 P000900 0.0 062 Q000900 0.0 062 R000900 0.0 063 A000900 0 063 B000900 0.0 066 A000900 Y 066 C000900 Y 067 000900 N 068 A000900 N 068 B000900 Y 069 000900 N 070 A010900 Y 070 A020900 Y 070 B010900 Y 070 B020900 N 070 C010900 N 070 C020900 N 070 D010900 Y 070 D020900 N 070 E010900 Y 070 E020900 N 070 F010900 Y 070 F020900 N 070 G010900 Y 070 G020900 N 070 H010900 Y 070 H020900 N 070 I010900 N 070 I020900 N 070 J010900 Y 070 J020900 N 070 K010900 Y 070 K020900 N 070 L010900 Y PAGE 22 070 L020900 Y 070 M010900 Y 070 M020900 N 070 N010900 N 070 N020900 N 070 O010900 Y 070 O020900 N 070 P010900 N 070 P020900 N 070 Q010900 N 070 Q020900 N 070 R010900 N 070 R020900 N 071 A000900 104619 071 B000900 108253 071 C000900 63830 071 D000900 164 072 A000900 12 072 B000900 85 072 C000900 1194 072 D000900 0 072 E000900 0 072 F000900 590 072 G000900 98 072 H000900 0 072 I000900 70 072 J000900 0 072 K000900 0 072 L000900 42 072 M000900 32 072 N000900 4 072 O000900 0 072 P000900 0 072 Q000900 13 072 R000900 8 072 S000900 167 072 T000900 1 072 U000900 0 072 V000900 0 072 W000900 28 072 X000900 1053 072 Y000900 306 072 Z000900 532 072AA000900 1450 072BB000900 0 072CC010900 3340 072CC020900 0 072DD010900 602 072DD020900 2 072EE000900 240 073 A010900 0.1000 PAGE 23 073 A020900 0.1000 073 B000900 0.0400 073 C000900 0.0000 074 A000900 286 074 B000900 0 074 C000900 0 074 D000900 0 074 E000900 0 074 F000900 65148 074 G000900 0 074 H000900 0 074 I000900 0 074 J000900 0 074 K000900 0 074 L000900 129 074 M000900 67 074 N000900 65630 074 O000900 0 074 P000900 114 074 Q000900 0 074 R010900 0 074 R020900 0 074 R030900 0 074 R040900 118 074 S000900 0 074 T000900 65398 074 U010900 5722 074 U020900 23 074 V010900 11.38 074 V020900 11.38 074 W000900 0.0000 074 X000900 221 074 Y000900 0 075 A000900 0 075 B000900 65503 076 000900 0.00 SIGNATURE WALLACE LAU TITLE FINANCIAL ANALYST EX-27 2
6 0000861106 HSBC MUTUAL FUNDS TRUST 010 GROWTH AND INCOME FUND YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 77937903 106441678 95598 8082 0 106545358 0 0 278418 278418 0 75862099 7664450 4465516 0 0 1925776 0 28479065 106266940 1352588 21952 0 844079 530461 9102892 13103132 22736485 0 531024 12216636 0 3357173 1168181 1009942 51072196 36028 5004055 0 0 518499 0 957233 94412420 12.36 .07 3.23 .08 1.72 0 13.86 .89 0 0
EX-27 3
6 0000861106 HSBC MUTUAL FUNDS TRUST 020 NEW YORK TAX-FREE BOND FUND YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 31044056 33266094 565319 2660 0 33834073 0 0 166034 166034 0 31937817 2891274 3269573 0 0 0 491816 2222038 33668039 16200 1887968 0 336144 1568024 805303 (300037) 2073290 0 1568024 0 0 144518 601146 78329 (3855935) 0 0 0 1297119 158707 0 449014 35043973 11.48 .51 .16 .51 0 0 11.64 .96 0 0
EX-27 4
6 0000861106 HSBC MUTUAL FUNDS TRUST 061 FIXED INCOME FUND YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 51378774 53549904 642185 4148 0 54196237 0 0 362679 362679 0 53369683 5191464 6067976 33514 0 0 1740769 2171130 53833558 48520 3598511 0 500513 3146518 1275186 91117 4512821 0 3146518 0 0 902978 1784806 5316 (7568720) 14033 0 0 2996474 309890 0 568143 56322872 10.12 .57 .25 .57 0 0 10.37 .89 0 0
EX-27 5
6 0000861106 HSBC MUTUAL FUNDS TRUST 091 INTERNATIONAL EQUITY FUND YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 58176013 65148056 129285 352596 0 65629937 0 0 232275 232275 0 58802471 22754 29868 0 68928 0 370807 7034926 65397662 1193860 85020 0 746966 531914 1450203 3340139 5322256 0 2400 951 0 333 7824 377 (2369708) 0 0 422475 1180096 589589 0 1053334 287328 10.35 .08 1.09 .10 .04 0 11.38 1.12 0 0 Service Class
EX-27 6
6 0000861106 HSBC MUTUAL FUNDS TRUST 092 INTERNATIONAL EQUITY FUND YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 58176013 65148056 129285 352596 0 65629937 0 0 232275 232275 0 58802471 5722439 6520055 0 68928 0 370807 7034926 65397662 1193860 85020 0 746966 531914 1450203 3340139 5322256 0 601970 239229 0 1642226 2460775 20933 (2369708) 0 0 422475 1180096 589589 0 1053334 65216143 10.35 .08 1.09 .10 .04 0 11.38 1.14 0 0 Institutional Class
EX-99 7 Report of Independent Auditors To the Shareholders and Board of Trustees of HSBC Mutual Funds Trust In planning and performing our audit of the financial statements of HSBC Mutual Funds Trust (comprised of the Growth & Income Fund, New York Tax-Free Bond Fund, Fixed Income Fund and International Equity Fund) for the year ended December 31, 1998, we considered its internal control, including control activities for safeguarding securities, in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, and not to provide assurance on the internal control. The management of HSBC Mutual Funds Trust is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. Generally, controls that are relevant to an audit pertain to the entity's objective of preparing financial statements for external purposes that are fairly presented in conformity with generally accepted accounting principles. Those controls include the safeguarding of assets against unauthorized acquisition, use or disposition. Because of inherent limitations in internal control, errors or fraud may occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that it may become inadequate because of changes in conditions or that the effectiveness of the design and operation may deteriorate. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the specific internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control and its operation, including controls for safeguarding securities, that we consider to be material weaknesses as defined above at December 31, 1998. This report is intended solely for the information and use of the board of trustees and management of HSBC Mutual Funds Trust and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties. ERNST & YOUNG LLP February 12, 1999 EX-99 8 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12 HSBC MUTUAL FUNDS TRUST (Name of Registrant as Specified in its Charter) (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration No.: 3) Filing Party: 4) Date Filed: [PASTE-UP LETTERHEAD HERE] August 21, 1998 Dear Valued Shareholder: The enclosed proxy materials relate to a Special Meeting of Shareholders of the HSBC International Equity Fund (the "Fund"), a series of HSBC Mutual Funds Trust, to be held on September 25, 1998 at 10:00 a.m., local time, at the Fund's offices at 3435 Stelzer Road, Columbus, Ohio 43219 (the "Meeting"). At the Meeting, Shareholders will be asked to approve a New Sub-Advisory Agreement (the "New Sub-Advisory Agreement") between HSBC Asset Management Americas Inc., the current investment adviser to the Fund, and Delaware International Advisers Ltd. ("Delaware International"). The Fund's Board of Trustees unanimously voted to replace the Current Sub-Advisers with Delaware International, to serve as Sub-Adviser effective September 25, 1998. The Trustees are recommending that Shareholders approve the New Sub-Advisory Agreement with Delaware International at the Meeting. Shareholders will also be asked at the Meeting to approve changes to the Fund's investment objective and eliminate three investment restrictions from the Fund's fundamental investment policies. The Trustees are also recommending that Shareholders approve each of these changes to the Fund's investment objective and policies. Although the Trustees would like very much to have you attend the Meeting, they realize that this is not always possible. Whether or not you plan to be present at the Meeting, YOUR VOTE IS NEEDED. PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED. Your Trustees look forward to seeing you at the Meeting or receiving your proxy so your shares may be voted at the Meeting. Sincerely yours, /s/ Walter B. Grimm --------------------------- Walter B. Grimm President SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE SO AS TO BE REPRESENTED AT THE MEETING. Thank you for your cooperation and prompt attention to this matter. PRELIMINARY COPIES FOR USE OF THE SECURITIES AND EXCHANGE COMMISSION ONLY HSBC MUTUAL FUNDS TRUST : INTERNATIONAL EQUITY FUND 3435 STELZER ROAD COLUMBUS, OHIO 43219 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 25, 1998 To the Shareholders: Notice is hereby given that a Special Meeting of Shareholders of the HSBC International Equity Fund (the "Fund"), a series of HSBC Mutual Funds Trust (the "Trust"), will be held at the offices of the Fund at 3435 Stelzer Road, Columbus, Ohio 43219 at 10:00 a.m. Eastern Daylight Time, on September 25,1998, for the following purposes: 1. Approve a new Sub-Advisory Agreement between HSBC Asset Management Americas Inc., the Investment Adviser to the Fund, and Delaware International Advisers Ltd. ("Delaware International"), a new sub- adviser for the Fund as described in the attached Proxy Statement. 2. Approve a change to the investment objective of the Fund to seek to provide investors with long-term capital appreciation by investing, under ordinary market conditions, at least 65% of its total assets in equity securities (including American, European and Global Depositary Receipts) issued by companies based outside the United States. 3. Approve a change in the investment policies of the Fund to remove the restriction on the Fund purchasing securities of any company with a record of less than three years' continuous operation if such purchase would cause the Fund's investments in all such companies taken at cost to exceed 5% of the Fund's total assets taken at market value. 4. Approve a change in the investment policies of the Fund to remove the restriction on the Fund investing in warrants in excess of 5% of the Fund's net assets, and to remove the restriction on the Fund investing in warrants which are listed on the New York or American Stock Exchanges in excess of 2% of the Fund's net assets. 5. Approve a change in the investment policies of the Fund to remove the restriction on the Fund purchasing or retaining securities of any company which the officers and trustees of the Trust and officers and directors of the Adviser who individually own more than 1/2 of 1% of the securities of that company, together own beneficially more than 5% of such securities. 6. To transact such other business as may properly come before the meeting, or any adjournment thereof. The Board of Trustees of the Fund has fixed the close of business on August 6, 1998 as the record date for the determination of Shareholders entitled to notice of and to vote at the meeting. By Order of the Board of Trustees /s/ Robert L. Tuch Robert L. Tuch Assistant Secretary August 21, 1998 YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE. PRELIMINARY COPIES FOR USE OF THE SECURITIES AND EXCHANGE COMMISSION ONLY HSBC MUTUAL FUNDS TRUST: INTERNATIONAL EQUITY FUND 3435 Stelzer Road Columbus, Ohio 43219 SPECIAL MEETING OF SHAREHOLDERS September 25, 1998 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees of the HSBC Mutual Funds Trust (the "Trust") to be voted at a Special Meeting of Shareholders ("Shareholders") of the HSBC International Equity Fund (the "Fund"), a separate series of the Trust, to be held on Friday, September 25, 1998, at 10:00 a.m. Eastern Daylight Time at the offices of the Fund at 3435 Stelzer Road, Columbus, Ohio 43219, and at any adjournments thereof (collectively, the "Meeting"). A Notice of Special Meeting of Shareholders and proxy card accompany this Proxy Statement. This Proxy Statement is being mailed to the Shareholders on or about August 21, 1998. At the Meeting, Shareholders will be asked to consider and vote upon five different proposals. Proposal 1 relates to the selection of Delaware International Advisers Ltd. as the investment sub-adviser to the Fund. 1. Approve a new Sub-Advisory Agreement between HSBC Asset Management Americas Inc., the Investment Adviser to the Fund, and Delaware International Advisers Ltd. ("Delaware International"), a new sub- adviser for the Fund. Proposal 2 relates to modifying the Fund's investment objective. Proposals 3 through 5 relate to updating certain fundamental investment policies of the HSBC International Equity Fund to provide the Fund greater investment flexibility. Approval of a change to the Fund's investment objective or to one of the Fund's fundamental investment policies requires Shareholder approval. The specifics of Proposals 2 through 5 are as follows: 2. Approve a change to the investment objective of the Fund to seek to provide investors with long-term capital appreciation by investing, under ordinary market conditions, at least 65% of its total assets in equity securities (including American, European and Global Depositary Receipts) issued by companies based outside of the United States. Currently, the International Equity Fund seeks to invest 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. 3. Approve a change in the investment policies of the Fund to remove the restriction on the Fund purchasing securities of any company with a record of less than three years' continuous operation if such purchase would cause the Fund's investments in all such companies taken at cost to exceed 5% of the Fund's total assets taken at market value. 4. Approve a change in the investment policies of the Fund to remove the restriction on the Fund investing in warrants in excess of 5% of the Fund's net assets, and to remove the restriction on the Fund investing in warrants which are listed on the New York or American Stock Exchanges in excess of 2% of the Fund's net assets. 1 5. Approve a change in the investment policies of the Fund to remove the restriction on the Fund purchasing or retaining securities of any company which the officers and trustees of the Trust and officers and directors of the Adviser who individually own more than 1/2 of 1% of the securities of that company, together own beneficially more than 5% of such securities. 6. To transact such other business as may properly come before the meeting, or any adjournment thereof. Proxy solicitations will be made, beginning on or about August 21, 1998, primarily by mail, but proxy solicitations also may be made by telephone, facsimile or personal interviews conducted by officers and employees of the Fund as well as by BISYS Fund Services ("BISYS"). BISYS acts as the distributor, administrator and transfer agent of the Fund. BISYS is located at 3435 Stelzer Road, Columbus, Ohio 43219. The costs of proxy solicitation and expenses incurred in connection with the preparation of this Proxy Statement and its enclosures will be paid by the Fund. The Trust's Annual Report to Shareholders for the fiscal year ended December 31, 1997, containing audited financial statements, may be obtained, without charge, by calling 1-800-634-2536 or mailing your request to: HSBC Mutual Funds Trust,c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219. The HSBC International Equity Fund consists of two classes of shares, a Service Class and an Institutional Class. Each class of shares has an unlimited number of shares of beneficial interest in the Fund (the "Shares"), each Share having a par value of $.001. Each Share outstanding on the record date is entitled to one vote on all matters submitted to Shareholders at the Special Meeting, with pro rata voting rights for any fractional shares. The tellers appointed for the Special Meeting will count the total number of votes cast FOR approval of the proposals for purposes of determining whether sufficient affirmative votes have been cast. On August 6, 1998, the record date, there were 24,246.640 Service Class Shares outstanding and 6,031,448.345 Institutional Class Shares outstanding. The Fund's trustees and officers beneficially own (individually and as a group) less than 1% of the outstanding shares of the Institutional Class and less than 1% of the outstanding shares of the Service Class as of August 6, 1998. PROPOSAL 1: APPROVE A NEW SUB-ADVISORY AGREEMENT BETWEEN HSBC ASSET MANAGEMENT AMERICAS INC. AND DELAWARE INTERNATIONAL ADVISERS LTD. FOR THE HSBC INTERNATIONAL EQUITY FUND. The Trustees recommend that the Shareholders of the HSBC International Equity Fund approve a new sub-advisory agreement (the "New Sub-Advisory Agreement") between HSBC Asset Management Americas Inc. (the "Adviser") and Delaware International Advisers Ltd. ("Delaware International"). Shareholders are asked to approve the New Sub-Advisory Agreement in accordance with the requirements of the Investment Company Act of 1940, as amended (the "1940 Act"). The New Sub-Advisory Agreement is similar in all material respects to the current sub-advisory agreements (collectively the "Current Sub-Advisory Agreements"), in effect between the Adviser and HSBC Asset Management Europe Ltd., HSBC Asset Management Hong Kong Ltd., HSBC Asset Management (Japan) KK, HSBC Asset Management Singapore and HSBC Asset Management Australia Limited (collectively the "Current Sub-Advisers"), except for the fee allocated to the sub-advisers and the effective and termination dates. Actual advisory fees paid by the Fund will be higher under the new sub-advisory arrangement because the Adviser and Delaware International, collectively, will waive a smaller percentage of their earned fees than the Adviser and Current Sub-Advisers have voluntarily waived in the past. See the "Sub-Advisory Fees" section below for a full discussion of current and pro forma fees under the New Sub-Advisory Agreement. A copy of the New Sub-Advisory Agreement is set forth as Exhibit I to this Proxy Statement. 2 BACKGROUND HSBC Mutual Funds Trust (the "Trust") was organized in Massachusetts on November 1, 1989 as a Massachusetts business trust and is an open-end, diversified management investment company with multiple investment portfolios, including the International Equity Fund, Growth and Income Fund, Fixed Income Fund and New York Tax Free Bond Fund. This proxy statement relates to the International Equity Fund. HSBC Asset Management Americas Inc., the North American investment affiliate of HSBC Holdings plc (Hong Kong and Shanghai Banking Corporation) and Marine Midland Bank, has served as adviser to the HSBC International Equity Fund since the Fund's inception on April 25, 1994. HSBC Asset Management Americas Inc. is located at 140 Broadway, New York, New York 10005. As of June 1, 1998, the Adviser managed over $3.9 billion of assets of individuals, pension plans, corporations and institutions. The Adviser currently retains the Current Sub-Advisers to act as investment sub-advisers to the Fund. Each of the Current Sub-Advisers is an investment advisory affiliate of HSBC Holdings plc (Hong Kong and Shanghai Banking Corporation). Under the Current Sub-Advisory Agreements, each of the Current Sub-Advisers undertakes at its own expense to furnish the HSBC International Equity Fund (the "Fund") and the Adviser with micro- and macro-economic research, advice and recommendations, and economic and statistical data with respect to the Fund's investments, subject to the overall review by the Adviser and the Board of Trustees. Within their geographical regions, each of the Current Sub-Advisers has full investment discretion for the portions of the Fund allocated to their region by the Adviser. Fund management has decided that a different management style is appropriate for the Fund. Since its inception the Fund has primarily been managed in a growth-oriented style. After careful consideration, Fund management has decided that a value-oriented style is potentially more desirable in the eyes of current and future shareholders. Fund management believes that hiring a new sub-adviser with a value-oriented style for the Fund would be in the best interest of the Fund and all of the Fund's Shareholders. Delaware International's approach in selecting investments is primarily oriented to individual stock selection and is value driven. In selecting stocks for the Fund, Delaware International will identify those stocks that it believes will provide total return over a market cycle, taking into consideration, among other things, movements in the price of the individual security and the impact of currency fluctuation on a United States domiciled, dollar-based investor. Delaware International conducts fundamental research on a global basis in order to identify securities that, in Delaware International's opinion, have the potential for long-term total return. This research effort generally centers on a value-oriented dividend discount methodology with respect to individual securities and market analysis that seeks to isolate value across country boundaries. The approach focuses on future anticipated dividends and discounts the value of those dividends back to what they would be worth if they were received today. In addition, the analysis typically includes a comparison of the values and current market prices of different possible investments. Delaware International's general management strategy tends to emphasize long-term holding of securities. In selecting Delaware International, the Board of Trustees considered, among other things, the nature and quality of the services to be provided by Delaware International, the investment performance of Delaware International in managing other international equity funds similar to the HSBC International Equity Fund, the experience and financial condition of Delaware International, the methods of analysis and level of advisory fees to be paid compared to industry averages and Delaware International's commitment to mutual fund advisory activities. Based on this review, the Trustees voted unanimously, with the "non-interested" Trustees voting separately, to appoint Delaware International as the new sub-adviser to the Fund and to recommend to Shareholders of the Fund that they approve the New Sub-Advisory Agreement. 3 INFORMATION REGARDING DELAWARE INTERNATIONAL Delaware International's principal offices are located at Third Floor, 80 Cheapside, London EC2V 6EE England. Delaware International is a subsidiary of Delaware International Holdings Ltd., which owns 18.9% of the voting shares of Delaware International, and DMH Corp., which owns 81.1% of the voting shares of Delaware International. Delaware International Holdings Ltd., with principal offices at Clarendon House, Church Street, Hamilton, Bermuda, and DMH Corp., with principal offices at Foulkstone Plaza, 1403 Foulk Road, Wilmington, DE 19803, are each wholly-owned subsidiaries of Delaware Management Holdings, Inc., a Delaware corporation ("DMH"), with principal offices at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. DMH and its subsidiaries (collectively, "Delaware Investments") trace their origins to an investment counseling firm founded in 1929. Delaware International was formed in 1990 and provides investment advisory services primarily to institutional accounts and mutual funds in the global and international equity and fixed income markets. As of May 31, 1998, Delaware International managed approximately $10 billion in global and foreign stock and bond portfolios for separate account and investment company clients. As of that date, advisory affiliates within Delaware Investments had total assets under management of approximately $45 billion, including the assets managed by Delaware International. DMH is a wholly-owned subsidiary of Lincoln National Investment Companies, Inc., with principal offices at One Commerce Square, Philadelphia, PA 19103, which is in turn a wholly-owned subsidiary of Lincoln National Investments, Inc., with principal offices at 200 East Berry Street, Fort Wayne, IN 46802. Lincoln National Investments, Inc. is a wholly-owned subsidiary of Lincoln National Corporation ("Lincoln National"). Lincoln National, a publicly held company with headquarters at 200 East Berry Street, Fort Wayne, IN 46802, is a financial services holding company. Its wealth accumulation and protection businesses provide annuities, life insurance, retirement planning, life-health reinsurance, institutional investment management and mutual funds. DESCRIPTION OF THE ADVISORY AGREEMENT, CURRENT SUB-ADVISORY AGREEMENTS, AND THE NEW SUB-ADVISORY AGREEMENT ADVISORY AGREEMENT The current advisory agreement between the Adviser and the Trust ("Advisory Agreement") was first executed on May 1, 1990 and was last approved by the Shareholders at that time. The Advisory Agreement was last approved by the Trustees, including the Trustees who were "non-interested", at a meeting of the Board of Trustees on January, 27 1998. Under the Advisory Agreement, the Adviser earns a fee calculated at an annual rate of 0.90% of the Fund's average daily net assets. For the fiscal year ended December 31, 1997, pursuant to its Advisory Agreement, the Adviser earned $397,031 in investment advisory fees. The Adviser voluntarily waived $307,447 of its fees, actually receiving only $89,584 in investment advisory fees. For the fiscal year ended December 31, 1997, the Adviser earned $10,614 in fees as Shareholder Servicer Assistant to the Fund and $7,960 in fees as Co- Administrator to the Fund, all of which was waived. Under the new arrangements, the Adviser will no longer perform these services for the Fund. Fund management believes this will not have a material effect on the Fund. 4 The Advisory Agreement also provides the Adviser with full authority to operate the Fund, even in the absence of a sub-adviser. The Adviser has full authority to operate the Fund without the need to secure shareholder approval in the event the New Sub-Advisory Agreement is terminated by either party. SUB-ADVISORY AGREEMENTS The New Sub-Advisory Agreement is attached to this Proxy Statement as Appendix A, and the description of the New Sub-Advisory Agreement set forth in this Proxy Statement is qualified in its entirety by reference to Appendix A. The terms of the New Sub-Advisory Agreement are substantially similar in all material respects to the terms of the Current Sub-Advisory Agreements except for the fee allocated to the sub-adviser and the effective and termination dates. Actual advisory fees paid by the Fund will be higher under the new sub- advisory arrangement because the Adviser and Delaware International, collectively, will waive a smaller percentage of their earned fees than the Adviser and Current Sub-Advisers have voluntarily waived in the past. See the "Sub-Advisory Fees" section below for a full discussion of current and pro forma fees under the New Sub-Advisory Agreement. The Current Sub-Advisory Agreements were initially approved by the Board of Trustees as follows: agreements with HSBC Asset Management Europe Ltd. and HSBC Asset Management Hong Kong Ltd. were approved on March 1, 1995; agreements with HSBC Asset Management (Japan) KK and HSBC Asset Management Australia Limited were approved on July 1, 1995; the agreement with HSBC Asset Management Singapore was approved on April 30, 1996. Each of these Current Sub-Advisory Agreements was initially a two-year agreement and annual continuances have been approved by the Board of Trustees of the Trust. As required by the 1940 Act, each of the Current Sub-Advisory Agreements was terminable without penalty on 60 days written notice by the Board of Trustees or by vote of the majority of shareholders of the Fund. The Board of Trustees voted on May 5, 1998 to approve the New Sub-Advisory Agreement with Delaware International, contingent upon Shareholder approval. The Current Sub-Advisers, in return for their fees, and subject to the control and supervision of the Adviser as well as the Board of Trustees and in conformance with the investment objective and policies of the Fund set forth in the Trust's current registration statement and any other policies established by the Board of Trustees, manage the investment and reinvestment of assets of the Fund. In this regard, it is the responsibility of the Current Sub-Advisers to make investment decisions for the Fund and to place the Fund's purchase and sale orders for investment securities. In addition to making investment decisions, the Current Sub-Advisers exercise voting rights in respect of portfolio securities for the Fund. The Current Sub-Advisers provide at their expense all necessary investment, management and administrative facilities, including salaries of personnel and equipment needed to carry out their duties under the Sub-Advisory Agreements. The Current Sub-Advisers also provide the Fund with investment research and whatever statistical information the Fund may reasonably request with respect to securities the Fund holds or contemplates purchasing. Under the proposed New Sub-Advisory Agreement, Delaware International, in return for its fees, will manage the investment and reinvestment of assets of the Fund. As a sub-advisor, Delaware International will be subject to the control and supervision of the Adviser as well as the Board of Trustees. It will be the responsibility of Delaware International to make investment decisions for the Fund and to place the Fund's purchase and sale orders for investment securities. In addition to making investment decisions, Delaware International will exercise voting rights in respect of portfolio securities for the Fund. Under the proposed New Sub- 5 Advisory Agreement Delaware International will provide at its expense the personnel and equipment necessary to carry out its duties. Delaware International will provide the Fund with quarterly reports with respect to securities the Fund holds or markets in which the Fund has invested. The New Sub-Advisory Agreement will provide that, in the absence of willful misfeasance, bad faith, gross negligence, or a reckless disregard of the performance of the duties of Delaware International to the Fund, Delaware International will not be subject to liabilities to the Adviser, the Trust, the Fund or to any shareholder of the Fund, for any act or omission in the course of, or connected with, rendering services under the New Sub-Advisory Agreement or for any losses that may be sustained in the purchase, holding or sale of any security. Delaware International will not be liable for any loss incurred by reason of any act or omission of the Adviser, any bank, broker, the Fund's custodian bank, any administrator, transfer agent or distributor, or any director, officer, or trustee of the Trust. Delaware International selects brokers and dealers to execute transactions for the purchase or sale of portfolio securities based upon Delaware International's judgment of the broker's or dealer's professional capability to provide the service. The primary consideration is whether the broker or dealer is capable of providing best execution. Delaware International may allocate, out of all commission business generated by all accounts under management, brokerage business to brokers or dealers who provide brokerage and research services to Delaware International or accounts under management. Such services are used by Delaware International in connection with its investment decision- making process for one or more accounts managed by Delaware International, and may or may not be used, or used exclusively, with respect to the account generating the brokerage. As provided in the Securities Exchange Act of 1934, Delaware International may cause higher commissions to be paid to brokers and dealers who provide brokerage and research services than to brokers and dealers who do not provide such services, if such higher commissions are deemed reasonable in relation to the value of the brokerage and research services being provided. The New Sub-Advisory Agreement shall remain in full force and effect for two years from September 25, 1998 and shall continue in full force and effect for successive periods of one year thereafter, but only so long as each such continuance is specifically approved annually by the Board of Trustees and by the vote of a majority of the Trustees who are not "interested persons" of the Trust or the Adviser, or by vote of the holders of a majority of the Fund's outstanding voting securities. The New Sub-Advisory Agreement may be terminated at any time, without payment of any penalty, by vote of the Trustees, by vote of a majority of the outstanding voting securities of the Fund, or by Delaware International, in each case on 60 days' written notice. As required by the 1940 Act, the New Sub-Advisory Agreement will automatically terminate, without the payment of any penalty, in the event of its assignment as defined in the 1940 Act. No arrangements or understandings exist between the Trust and Delaware International with respect to the composition of the board of directors of Delaware International or the Board of Trustees of the Trust or with respect to the selection or appointment of any person to any office with either of them. Each of the Trustees of the Trust has represented that they have not purchased or sold, for their own accounts or those of an affiliate, securities issued by the Delaware International or its affiliates. SUB-ADVISORY FEES Under the Advisory Agreement the Adviser earns a fee calculated at an annual rate of 0.90% of the Fund's average daily net assets. The Adviser then in turn pays to the sub-adviser the fee earned by the sub-adviser. Under the Current Sub-Advisory Agreements, the Current Sub-Advisers collectively earn a contractual fee of 0.45% of the International Equity Fund's average daily net assets. Under the proposed new sub-advisory relationship with Delaware International, the Adviser will continue to earn a contractual fee of 0.90% of the Fund's average daily net assets, but under the New Sub-Advisory Agreement the Adviser has contracted to pay Delaware International up to 0.75% of the Fund's average daily net assets. To the extent the Adviser and Delaware International waive less in fees than the Adviser and the Current Sub-Advisers have waived under the Advisory Agreement and the Current Sub-Advisory Agreements, the Fund will incur greater advisory expenses under the New Sub- Advisory Agreement. For the services it provides under the New Sub-Advisory Agreement, Delaware International will receive fees in accordance with the following table rather than receiving a fee computed at a flat-rate of a 6 percentage of the assets. The fee earned is computed daily at an annual rate based on the average daily net assets of the Fund. Average Daily Value Annual Fee Rate as a Percentage of the Fund's Assets of Average Daily Value -------------------- ------------------------------- First $20 Million 0.75% Next $30 Million 0.50% Next $50 Million 0.40% Thereafter 0.35% Subject to a minimum account size of $20 million (or fees equivalent thereto). Based on the Fund's net assets on June 1, 1998 of approximately $63,106,747, the above fee schedule would result in an effective fee rate of approximately 0.56%. SUMMARY OF ANNUAL FUND OPERATING EXPENSES The following information is provided to assist an understanding of the difference in the costs and expenses that an investor in the Fund would bear directly or indirectly under the New Advisory Arrangement compared with the Current Advisory Arrangement. The information provided below under the "Current Advisory Arrangement" heading is based on expenses for the Fund for the fiscal year ended December 31, 1997, as adjusted for estimated operating expenses and voluntary reductions of investment advisory, administration, co-administration, shareholder servicer assistance and 12b-1fees. The information provided under the "New Advisory Arrangement" heading is based on the total assets of the Fund remaining at the June 1, 1998 level. 7
Current (Advisory Arrangement) New (Advisory Arrangement) ------------------------------ ------------------------------ Institutional Institutional Service Shares Shares Service Shares Shares --------------- -------------- --------------- ------------- SHAREHOLDER TRANSACTION EXPENSES: 5.00% 0.00% 5.00% 0.00% Maximum sales charge imposed on purchase of shares of the Funds (as a percentage of offering Price), ANNUAL FUND OPERATING EXPENSES: Management Fees* (net of 0.50% 0.50% 0.56% 0.56% fees not imposed) 12b-1 Fees (net of fees not 0.00% 0.00% 0.00% 0.00% imposed)** Administrative Services 0.10% 0.10% 0.10% 0.10% Fee*** Co-Administrative Services 0.00% 0.00% 0.00% 0.00% Fee**** Other Operating Expenses 0.57% 0.52% 0.57% 0.52% Total Fund Operating ---- ---- ---- ---- Expenses (net of fees and expenses not imposed) 1.17% 1.12% 1.23% 1.18% ==== ==== ==== ====
* These figures reflect advisory fees not imposed in the past (and not expected to be imposed in the future) as a result of a voluntary waiver by the Adviser. If these fees had been imposed in the past or will be imposed in the future, the advisory fees would be 0.90%. ** The fee under the Fund's Distribution Plan and Agreement is calculated on the basis of the average daily net assets of the Fund's Shares (Service Class only) at an annual rate not to exceed 0.35%. These figures reflect the waiver of all 12b-1 fees by the Fund's Distributor. *** Reflects administrative fees not imposed as a voluntarily waiver by BISYS Fund Services of 0.05% for the Fund. **** Reflects co-administrative fees of 0.03% and shareholder servicer assistance fees of 0.04% voluntarily waived by the Adviser. Under the New Advisory Arrangement the Adviser will no longer perform these functions for the Fund. The Fund's Institutional Shares are not subject to shareholder servicing assistance fees. Investors who purchase and redeem shares of a Fund through a customer account maintained at a Participating Organization may be charged additional fees by such Participating Organization related to services it provides for such Investors. The Fund may also pay fees to Participating Organizations for handling record keeping and certain administrative services for the customers who invest in the Fund through accounts maintained at the Participating Organization. The payment will not exceed 0.35% of the average daily net assets maintained by such Participating Organization. (The Fund's Institutional Class is not subject to these fees). 8 THE FOLLOWING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE EXPENSES SET FORTH ABOVE AND EXAMPLE SET FORTH BELOW REFLECT THE NON-IMPOSITION OF CERTAIN FEES AND EXPENSES. THE ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE FOLLOWING EXAMPLE ASSUMES A 5% ANNUAL RETURN; HOWEVER, THE FUNDS' ACTUAL RETURN WILL VARY AND MAY BE GREATER OR LESS THAN 5%. EXAMPLE: You would pay the following expenses on a $1,000 investment assuming a 5% annual return and the reinvestment of all dividends and distributions:
Current Sub-Advisory Agreement New Sub-Advisory Agreement ------------------------------ -------------------------- Service Class Institutional Shares Service Class Institutional Shares ------------- -------------------- ------------- -------------------- 1 year $ 61 $ 11 $ 62 $ 12 3 years $ 85 $ 36 $ 87 $ 37 5 years $111 $ 62 $114 $ 65 10 years $185 $136 $191 $143
During the fiscal year ended December 31, 1997, the Adviser paid the Current Sub-Advisers $200,014 collectively for their sub-advisory services pursuant to the the Current Sub-Advisory Agreements. If the New Sub-Advisory Agreement had been in effect during the last fiscal year, the New Sub-Adviser, Delaware International, would have received $264,294 representing an increase of $64,280, or 32.14%. The New Sub-Adviser's fee at the Fund's net assets on May 1, 1998 of approximately $63,035,171 would increase annual fees paid by the Adviser to the Sub-Adviser from $283,658 to $352,141, an increase of $68,482 or 24.14%. In order to counteract the increase in sub-advisory fees, the Adviser has agreed to waive its advisory fees in entirety. However, because in recent years both the Adviser and the Current Sub-Advisers had consistently agreed to waive portions of the fees to which they were contractually entitled, it is expected that under the New Sub-Advisory Agreement the total advisory fees paid by the Fund will increase. The Trustees believe that the fee rate provided for in the New Sub-Advisory Agreement will provide an effective means of compensating Delaware International for its advisory services. The new fee is believed by the Trustees to be within the range of sub-advisory fees paid by other comparable funds for comparable advisory services. Appendix B attached to this Proxy Statement contains information on the type, size and advisory fees of other similar investment company funds managed by Delaware International. It is anticipated that the value-oriented investment style of the New Sub-Adviser, Delaware International, may result in a higher than usual portfolio turnover rate on a short-term basis, as the New Sub-Adviser implements its investment style. although in the long-term, Delaware International's style tends to emphasize longer-term holdings rather than short-term trading. The Fund's portfolio turnover rate measures the frequency with which a Fund's portfolio of securities is traded. Generally, the higher the portfolio turnover rate, the higher the transaction costs to the Fund, which will generally increase the Fund's total operating expenses. In addition, the increased portfolio turnover may increase the likelihood of additional capital gains in the current year for the Fund. The Fund's portfolio turnover rate for the years ended December 31, 1997 and December 31, 1996 was 112.54% and 77.91%, respectively. 9 PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF DELAWARE INTERNATIONAL The name, address and principal occupation of the New Sub-Adviser's principal executive officer and each director or general partner is set forth below.
Current Position with Delaware ------------------------------ Name International Principal Occupation ---- ------------- -------------------- Wayne A. Stork* Chairman, CEO & Director Chairman/CEO & Director of Delaware Management Holdings, Inc. ("DMH"); Chairman/President/CEO/CIO of Delaware Management Company, a series of Delaware Management Business Trust ("DMC"); Chairman/CEO/CIO of Delaware Investment Advisers, a series of Delaware Management Business Trust ("DIA"); Trustee of Delaware Management Business Trust ("DMBT"); Director of Lincoln National Investment Companies, Inc. ("LNIC") David G. Tilles** Managing Director/CIO/Director Managing Director/CIO/Director of Delaware International G. Roger H. Kitson** Vice Chairman & Director Vice Chairman & Director of Delaware International Ian G. Sims** Deputy Managing Director/ Deputy Managing Director/ CIO Global Fixed Income/ CIO, Global Fixed Income/Director of Director Delaware International Timothy W. Sanderson** CIO, Equities /Director CIO, Equities /Director of Delaware International John C. E. Campbell* Director Executive Vice President/ Client Services/ Marketing of DIA George M. Chamberlain, Jr.* Director Senior Vice President/ Secretary/ General Counsel of DMH, DMC & DIA; Trustee of DMBT; George E. Deming, III* Director Vice President/ Senior Portfolio Manager of DIA Elizabeth A. Desmond** Senior Portfolio Manager, Senior Portfolio Manager/ Director Director of Delaware International David K. Downes* Director Executive Vice President/Chief Operating Officer Chief Financial Officer of DMH, DMC & DIA; Trustee of DMBT
10
Current Position with Delaware ------------------------------ Name International Principal Occupation ---- ------------- -------------------- John Emberson** Secretary/Finance Director/ Secretary/Finance Director/ Compliance Officer/Director Compliance Officer/Director of Delaware International Richard J. Flannery* Director Senior Vice President/ Corporate & International Affairs of DMH, DMC & DIA Clive A. Gillmore** Senior Portfolio Senior Portfolio Manager/Director Manager/Director of Delaware International Nigel G. May** Senior Portfolio Manager/ Senior Portfolio Manager/Director Director of Delaware International Jeffrey J. Nick* Director President/CEO & Director of LNIC; President & Director of DMH Hamish O. Parker** Senior Portfolio Senior Portfolio Manager/Director Manager/Director of Delaware International Richard G. Unruh, Jr.* Director Executive Vice President of DMH & DMC; President of DIA; Trustee of DMBT
The addresses for the principal executive officer and directors of Delaware International are set forth below. * One Commerce Square ** 80 Cheapside, Third Floor 2005 Market Street London EC2V 6EE Philadelphia, PA 19103 United Kingdom No officer or director of the New Sub-Adviser is also a director, officer, general partner or shareholder of the Trust. REQUIRED VOTE AND RECOMMENDATION As provided in the 1940 Act, approval of the New Sub-Advisory Agreement requires the affirmative vote of a majority (defined in the Miscellaneous section) of the outstanding voting securities of the Fund. Abstentions have the effect of a negative vote on the proposal to approve the New Sub-Advisory Agreement. If the Shareholders of the Fund fail to approve the New Sub-Advisory Agreement, the Board of Trustees will consider various alternatives for the Fund, including maintaining its relationships with the Current Sub-Advisers until such time as the Trustees select a different sub- adviser for the Fund. THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 1 AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 1. PROPOSALS 2 THROUGH 5: APPROVAL OF CHANGES 11 TO THE FUND'S INVESTMENT OBJECTIVE AND CERTAIN INVESTMENT POLICIES Proposals 2 through 5 relate to certain changes to the investment objective and fundamental policies of the Fund. The Board of Trustees approved these changes in order to update the Fund's investment objective and policies to reflect changes in the law and other regulatory developments and provide the Fund with flexibility to adapt to developments in the securities markets. The changes to the Fund's fundamental objective and policies will become effective immediately upon Shareholder approval. If a Proposal is not approved by a vote of the Shareholders, the current objective or policy as applied to the Fund will remain unchanged. PROPOSAL 2: APPROVE A CHANGE TO THE INVESTMENT OBJECTIVE OF THE FUND TO SEEK TO PROVIDE INVESTORS WITH LONG-TERM CAPITAL APPRECIATION BY INVESTING, UNDER ORDINARY MARKET CONDITIONS, AT LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES (INCLUDING AMERICAN, EUROPEAN AND GLOBAL DEPOSITARY RECEIPTS) ISSUED BY COMPANIES BASED OUTSIDE OF THE UNITED STATES. Currently, the International Equity Fund seeks to invest 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 ("International Equities"). If approved, this proposal will raise the percentage of the total assets of the Fund which may be invested in something other than International Equities, under ordinary market conditions, from 20% to 35%. In addition, this proposal will permit the Fund to invest even more than 35% of the Fund's total assets in something other than International Equities in times of unordinary conditions. This proposal will permit the Fund to invest a greater percentage of its total assets in non-equity securities as well as equity securities issued by companies based in the United States. If adopted, the Fund's revised investment objective will meet the requirements established by the Securities and Exchange Commission and will be consistent with current industry practice. This change in investment objective will give the Fund greater flexibility in making investment decisions. Allowing the Fund to invest a greater percentage of its total assets in something other than International Equities may allow the Fund to maintain a more diversified portfolio and potentially decrease investment risk to Shareholders. Under ordinary market conditions the Fund will continue to maintain at least 65% of its total assets invested in equity securities (including American, European and Global Depositary Receipts) issued by companies based outside the United States. While this change in the investment objective of the Fund will permit the Fund to invest a greater percentage of its total assets in securities that are not International Equities, the Adviser and sub-adviser will exercise care, consistent with the Fund's investment objectives and policies, in investing any of the Fund's assets in such securities. REQUIRED VOTE AND RECOMMENDATION As provided in the 1940 Act, approval of a change to the Fund's investment objective requires the affirmative vote of a majority (defined in the Miscellaneous section) of the outstanding voting securities of the Fund. Abstentions have the effect of a negative vote on this Proposal. If the Shareholders of the Fund fail to approve this Proposal, the Fund's current investment objective will be retained. 12 THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 2 AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 2. PROPOSAL 3: APPROVE A CHANGE IN THE INVESTMENT POLICIES OF THE FUND TO REMOVE THE RESTRICTION ON THE FUND PURCHASING SECURITIES OF ANY COMPANY WITH A RECORD OF LESS THAN THREE YEARS' CONTINUOUS OPERATION IF SUCH PURCHASE WOULD CAUSE THE FUND'S INVESTMENTS IN ALL SUCH COMPANIES TAKEN AT COST TO EXCEED 5% OF THE TOTAL ASSETS OF THE FUND. Fund management recommends that Shareholders vote to remove the Fund's fundamental investment policy which requires the Fund to limit its investments in securities of issuers which have been in operation for less than three years to 5% of its total assets. The Fund's current policy states that the Fund may not purchase securities of any company with a record of less than three years' continuous operation if such purchase would cause the Fund's investments in all such companies taken at cost to exceed 5% of the Fund's total assets taken at market value. Subject to Shareholder approval, this fundamental investment policy would be eliminated from the investment policies of the Fund. The primary purpose of this Proposal is to update the Fund's investment policies in light of recent changes in the law. The Fund's fundamental policies were originally adopted to be consistent with state securities ("blue sky") regulations, which placed limits on the amounts of certain types of securities that a mutual fund could purchase. Recent federal legislation eliminated state regulatory requirements including the requirement embodied in this investment policy. If the Proposal is approved, the Fund will be able to invest more than 5% of its total assets in newly formed or "unseasoned" issuers. Eliminating this fundamental policy will conform the Fund's investment policies to the requirements of current federal law. In addition, eliminating this policy will provide increased investment flexibility and may provide opportunities to enhance the Fund's performance, but will also include the corresponding risk which accompanies investing in newly formed issuers. While removal of the restrictive investment policy will permit the Fund to invest an unlimited amount of its respective assets in newly formed or "unseasoned companies," the Adviser and sub-adviser will exercise care, consistent with the Fund's investment objectives and policies, in investing any of a Fund's assets in such securities. REQUIRED VOTE AND RECOMMENDATION As provided in the 1940 Act, approval of a change to one of the Fund's fundamental investment policies requires the affirmative vote of a majority (defined in the Miscellaneous section) of the outstanding voting securities of the Fund. Abstentions have the effect of a negative vote on this Proposal. If the Shareholders of the Fund fail to approve this Proposal, the current investment policy will be retained. THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 3 AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 3. 13 PROPOSAL 4. APPROVE A CHANGE IN THE INVESTMENT POLICIES OF THE FUND TO REMOVE THE RESTRICTION ON THE FUND INVESTING IN WARRANTS IN EXCESS OF 5% OF THE FUND'S NET ASSETS, AND TO REMOVE THE RESTRICTION ON THE FUND INVESTING IN WARRANTS WHICH ARE LISTED ON THE NEW YORK OR AMERICAN STOCK EXCHANGES IN EXCESS OF 2% OF THE FUND'S NET ASSETS. At the Meeting, Shareholders of the Fund will vote on removing the Fund's fundamental investment policy which requires the Fund to limit its investments in warrants. The Fund's current policy prohibits the Fund from investing in warrants if as a result, more than 5% of the Fund's net assets will be invested in warrants or if as a result more than 2% of the Fund's net assets will be invested in warrants listed on the New York or American Stock Exchanges. Subject to Shareholder approval, this fundamental investment policy would be eliminated from the investment policies of the Fund. The primary purpose of this Proposal is to update the Fund's investment policies in light of recent changes in the law. The Fund's fundamental policies were originally adopted to be consistent with state securities ("blue sky") regulations, which placed limits on the amounts of certain types of securities that a mutual fund could purchase. Recent federal legislation eliminated state regulatory requirements including the requirement embodied in this investment policy. If the Proposal is approved, the Fund will be able to invest more than 5% of its total assets in warrants and will be able to invest more than 2% of its total assets in warrants listed on the New York or American Stock Exchange. Eliminating this fundamental policy will conform the Fund's investment policies to the requirements of current federal law. In addition, eliminating this policy will provide increased investment flexibility and may provide opportunities to enhance the Fund's performance, but will also include the corresponding risks which accompany investments in warrants. While removal of the restrictive investment policy will permit the Fund to invest an unlimited amount of its assets in warrants, it is not presently anticipated that the Fund's investments in warrants will regularly exceed the levels permitted under the current investment policy. REQUIRED VOTE AND RECOMMENDATION As provided in the 1940 Act, approval of a change to one of the Fund's fundamental investment policies requires the affirmative vote of a majority (defined in the Miscellaneous section) of the outstanding voting securities of the Fund. Abstentions have the effect of a negative vote on this Proposal. If the Shareholders of the Fund fail to approve this Proposal, the current investment policy will be retained. THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 4 AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 4. PROPOSAL 5. APPROVE A CHANGE IN THE INVESTMENT POLICIES OF THE FUND TO PERMIT THE FUND TO PURCHASE OR RETAIN SECURITIES OF ANY COMPANY WHICH THE OFFICERS AND TRUSTEES OF THE TRUST AND OFFICERS AND DIRECTORS OF THE ADVISER WHO INDIVIDUALLY OWN MORE THAN 1/2 OF 1% OF THE SECURITIES 14 OF THAT COMPANY TOGETHER OWN BENEFICIALLY MORE THAN 5% OF SUCH COMPANY. At the Meeting, Shareholders of the Fund will vote on removing the Fund's fundamental investment policy which prohibits the Fund from purchasing or retaining securities of issuers which the Officers and Trustees of the Trust and the Officers and Directors of the Adviser who individually own more than 1/2 of 1% of the securities of that company together own beneficially more than 5% of such company. The Fund's current policy states that the Fund may not: purchase or retain the securities of any company if, to the knowledge of the Fund, Officers and Trustees of the Trust and Officers and Directors of the Adviser who individually own more than 1/2 of 1% of the securities of that company together own beneficially more than 5% of such securities. Subject to Shareholder approval, this fundamental investment policy would be eliminated from the investment policies of the Fund. The primary purpose of this Proposal is to update the Fund's investment policies in light of recent changes in the law. The Fund's fundamental policies originally adopted to be consistent with state securities ("blue sky") regulations, which placed limits on the amounts of certain types of securities that a mutual fund could purchase. Recent federal legislation eliminated state regulatory requirements including the requirement embodied in this investment policy. This proposal will eliminate the Fund's policy of avoiding investments in securities issued by companies whose securities are owned in certain amounts by the Officers and Trustees of the Trust and the Officers and Directors of the Adviser. Preventing conflicts of interest in fund management is a critically important objective. However, Fund management believes that the Fund's Code of Ethics is sufficient to accomplish this objective. The Fund maintains a Code of Ethics which has been adopted in accordance with SEC rules, to restrict the private investment activities of the Officers and Trustees of the Trust and the Officers and Directors of the Adviser. This Code of Ethics supplements Fund management's separate fiduciary obligation to act with the Fund's best interests at heart. It places the burden of avoiding potential conflicts by placing limits on the ability of the individuals in those key positions of Officer, Trustee or Director to purchase securities the Fund is invested in. The current policy takes the opposite approach and restricts the Fund's investments in securities which the key personnel purchase or hold. By approving this Proposal, Shareholders will be placing the Fund's investment priorities ahead of the investment priorities of the Fund's key personnel. Eliminating this fundamental policy will conform the Fund's investment policies to the requirements of current federal law. In addition, eliminating this policy will provide increased investment flexibility and may provide opportunities to enhance the Fund's performance. While removal of this investment restriction will allow the Fund to purchase securities of a company which the Trustees and Officers of the Trust and the Officers and Directors of the Adviser together have ownership exceeding 5% of the company, the Adviser and sub-adviser will exercise care, consistent with the Fund's investment objectives and policies, in investing any of a Fund's assets in such securities. REQUIRED VOTE AND RECOMMENDATION As provided in the 1940 Act, approval of a change to one of the Fund's fundamental investment policies requires the affirmative vote of a majority (defined in the Miscellaneous section) of the outstanding voting securities of the Fund. Abstentions have the effect of a negative vote on this 15 Proposal. If the Shareholders of the Fund fail to approve this Proposal, the current investment policy will be retained. THE BOARD OF TRUSTEES HAS APPROVED PROPOSAL 5 AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 5. At August 8, 1998 no person owned of record or, to the knowledge of management beneficially owned more than 5% of the outstanding shares of the Fund except as set forth below: Name and Address of Holder of Record Shares Held Percent of Class - ------------------------------- ------------------- ------------------- Service Class - ----------------- ------------------- ------------------- DONALDSON LUFKIN JENRETTE 1,252.032 5.163 SECURITIES CORPORATION INC P.O. BOX 2052 JERSEY CITY, NJ 07303-9998 DONALDSON LUFKIN JENRETTE 1,622.826 6.692 SECURITIES CORPORATION INC P.O. BOX 2052 JERSEY CITY, NJ 07303-9998 MARINE MIDLAND BANK, CUSTODIAN 4,727.414 19.497 PAUL M. DUDNE IRA TOPHILL CROSSKEYS SEVEN OAKS KENT ENGLAND TW13 Institutional Class - -------------------- - ------------------------------- ------------------- ------------------- MARINE MIDLAND BANK 6,029,915.668 99.974 ATTN BRIAN HUNT 17TH FL ONE MARINE MIDLAND CENTER BUFFALO NY 34240 MISCELLANEOUS DEFINITION OF MAJORITY. "Majority of the outstanding voting securities" means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund and (2) 67% or more of the shares of the Fund present at the Meeting if more than 50% of the outstanding shares are present at the Meeting in person or by proxy. METHODS OF TABULATION. Shares represented by proxies that reflect abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. Votes cast by proxy or in person at the Meeting will be counted by persons appointed as tellers for the Meeting. The tellers will count the total number of votes cast "for" approval of the proposal or proposals for purposes of determining whether sufficient affirmative votes have been cast. With respect to any proposal, abstentions and broker non-votes have the effect of a negative vote on the proposal. Any Shareholder giving a proxy has the power to revoke it prior to its exercise by submission of a later dated proxy, by voting in person or by letter to the Secretary of the Fund. In the event that a quorum is not present at the Meeting or in the event that a quorum is present but sufficient votes to approve any of the proposals are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of those Shares represented at the Meeting in person or by proxy. The persons named as proxies will vote those proxies which they are entitled to vote FOR any such proposal in favor of such an adjournment and will vote those proxies required to be voted AGAINST any such proposal against any such adjournment. A Shareholder vote may be taken on one of the proposals in this Proxy Statement prior to any such adjournment if sufficient votes have been received for approval. Under the by- laws of the Fund, a quorum is constituted by the presence in person or by proxy of the holders of a majority of the outstanding shares of the Fund entitled to vote at the Special Meeting. BROKER COMMISSIONS. During the fiscal year ended December 31, 1997, no commissions were paid to brokers affiliated with HSBC Americas. OTHER BUSINESS. The Trustees know of no other business to be brought before the Meeting. However, if any other matters properly come before the Meeting, it is the Trustees' intention that proxies which do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of Proxy. 16 DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETING OF SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not provide for regular annual meetings of Shareholders, and the Fund does not currently intend to hold such meetings. Shareholder proposals for inclusion in the Fund's proxy statement for any subsequent meeting must be received by the Trust not less than 120 days prior to any such meeting. 17 APPENDIX A SUBADVISORY AGREEMENT AGREEMENT made this 25th day of September, 1998 by and between HSBC ASSET MANAGEMENT AMERICAS INC., (the "CLIENT") and DELAWARE INTERNATIONAL ADVISERS LIMITED of Third Floor, 80 Cheapside, London EC2V 6EE England ("DELAWARE"). i. The CLIENT hereby appoints DELAWARE to manage funds in the International Equity Fund series (the "Fund") of HSBC Mutual Funds Trust (the "Trust") under the terms set forth below and represents that the CLIENT is duly authorized to enter into this Agreement and to delegate discretionary investment management with respect to the Fund to DELAWARE. DELAWARE hereby accepts such appointment. ii. This Agreement shall take effect when a copy of this Agreement has been returned to DELAWARE duly signed on the CLIENT's behalf. Following commencement, this Agreement shall replace any agreement relating to the management of the Fund which may have been previously entered into between DELAWARE and the CLIENT. This Agreement shall continue in effect for a period of two years from the date of its execution and may be renewed thereafter only so long as such renewal and continuance are specifically approved by the Board of Trustees of the Trust or by a vote of a majority of the outstanding voting securities of the Fund, and only if the terms and renewal hereof have been approved by the vote of a majority of the Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. iii. The CLIENT shall notify the Fund's custodian bank as to the appointment of DELAWARE as sub-adviser of the CLIENT with respect to the Fund. The CLIENT shall instruct the Fund's custodian bank to comply with instructions from DELAWARE given under the terms of this Agreement. iv. DELAWARE shall have sole discretion with respect to investments of assets in the Fund and may purchase and sell any type of investment in any amount or proportion and on any market, all without prior consultation. DELAWARE shall, however, be bound by the investment policies and restrictions of the Fund as are set forth from time to time in the Fund's prospectus (the "Prospectus"), a copy of which shall be provided to DELAWARE by the CLIENT initially and upon each update, supplement or amendment thereto. Unless indicated in the Prospectus, and subject to Rule 17f-5 under the Investment Company Act of 1940, as amended (the "1940 Act"), there shall be no restrictions on the markets on which transactions may be made on the Fund's behalf. DELAWARE may, but shall not be obligated to, participate on behalf of the Fund in any class action, formal or informal reorganization or restructuring proposal, merger, combination, indenture revision, consolidation, bankruptcy, liquidation or similar plan, agreement or arrangement with respect to securities in the Fund and, upon prior written notice or notice by telephone from DELAWARE to the CLIENT of DELAWARE's intention to participate in such matters, DELAWARE shall automatically and without further action by the CLIENT or the Fund be appointed as the FUND's attorney-in-fact for any such purpose, including without limitation causing the Fund to be bound to any such plan, agreement or arrangement. Under the terms of the Investment Management Agreement between the CLIENT and the Trust, with respect to the Fund, the Trust shall conduct its own business and affairs and shall bear the expenses and salaries necessary and incidental thereto. 1 v. DELAWARE shall have the authority to select the brokerage firms through which orders shall be placed. DELAWARE may combine orders for the Fund with orders for other accounts or funds under management. DELAWARE may, subject to its duty to secure best execution for the Fund (which for these purposes shall disregard any benefit which might enure directly or indirectly to the Fund as a result of the arrangement hereinafter described), effect transactions with or through the agency of another person with whom DELAWARE has an arrangement under which that person will from time to time provide to or procure for DELAWARE services or other benefits the nature of which are such that their provision results, or is designed to result, in an improvement in DELAWARE's performance in providing services for its clients and for which DELAWARE makes no direct payment but instead undertakes to place business with that person. When orders are placed, DELAWARE shall issue suitable instructions to the Fund's custodian bank with respect to deliveries and payments. vi. DELAWARE shall under no circumstances act as custodian for the Fund or have possession of any assets of the Fund. Accordingly, arrangements for the registration and identification of ownership and safe custody of documents of title must be made by the CLIENT or the Fund with a custodian bank which is selected by the Fund. vii. DELAWARE shall provide periodic statements to the CLIENT at quarterly intervals. Such statements will show all investments in the Fund and will contain details of the measure of portfolio performance. If the CLIENT provides instructions to DELAWARE as to the format of the periodic statements, such format may vary from the periodic statement format set forth in the rules of IMRO (as defined below). For purposes of such reports, securities in the Fund will normally be valued at mid-market prices as of the close of business on the last business day of the applicable period. A representative of DELAWARE shall, if requested, attend four (4) meetings of the Board of Trustees of the Trust per year, two (2) of which shall be in person and two (2) of which may be by telephonic conference. viii. It is understood that DELAWARE may perform similar services for other clients or funds and that the investment action taken for each client or fund may differ. ix. In the absence of willful misfeasance, bad faith, gross negligence, or a reckless disregard of the performance of duties of DELAWARE to the Fund, DELAWARE shall not be subject to liabilities to the CLIENT, the Trust, the Fund, or to any Shareholder of the Fund, for any act or omission in the course of, or connected with, rendering services under this Agreement or for any losses that may be sustained in the purchase, holding or sale of any security, or otherwise; nor shall DELAWARE be responsible for any loss incurred by reason of any act or omission of the CLIENT, any bank, broker, the Fund's custodian bank, any administrator, transfer agent or distributor, or any director, officer, or trustee of the Trust, whether appointed by or on behalf of DELAWARE, the CLIENT or the Fund. Nothing contained herein shall be deemed to waive any liability which cannot be waived under applicable law, including applicable U.S. state and federal securities laws and the Financial Services Act 1986 of the United Kingdom ("FSA"), or any rules or regulations adopted under any of those laws. x. As compensation for its services hereunder, the CLIENT shall pay to DELAWARE a monthly fee, within 15 business days following the end of each month, based upon the average daily net assets of the Fund during the month. The following annual fee rates shall apply: 2 Average Daily Net Annual Fee Rate as a Assets of the Fund Percentage of Average Daily Net Assets ------------------ -------------------------------------- First $20 Million 0.75% Next $30 Million 0.50% Next $50 Million 0.40% Thereafter 0.35% Subject to a minimum account size of $20 Million (or fees equivalent thereto). If this Agreement is terminated prior to the end of any calendar month, the fee shall be prorated for the portion of any month in which this Agreement is in effect according to the proportion which the number of calendar days during which this Agreement is in effect bears to the number of calendar days in the month, and shall be payable within 10 days after the date of effectiveness of the termination. xi. The CLIENT shall cause all proxies received by it or the Fund or on its or the Fund's behalf by the Fund's custodian bank to be delivered to DELAWARE on a timely basis. DELAWARE shall be authorized to vote on behalf of the Fund proxies relating to securities held in the Fund's portfolio, provided, however, that DELAWARE will comply with any written instructions received from the CLIENT as to the voting of proxies. xii. Notwithstanding Section ii hereof, this Agreement may be terminated by the CLIENT or the Fund at any time, without the payment of a penalty, on sixty days' written notice to DELAWARE of the CLIENT's or the Fund's intention to do so, in the case of the Fund pursuant to action by the Board of Trustees of the Trust or pursuant to vote of a majority of the outstanding voting securities of the Fund. DELAWARE may terminate this Agreement at any time, without the payment of a penalty on sixty days' written notice to the CLIENT and the Fund of its intention to do so. Termination will be without prejudice to the completion of transactions already initiated, which shall be completed in accordance with DELAWARE's usual practice. Upon termination of this Agreement, the obligations of all the parties hereunder shall cease and terminate as of the date of effectiveness of such termination, except for the obligation of the CLIENT to pay DELAWARE the fee provided in Section x hereof, prorated to the date of effectiveness of the termination. This Agreement shall automatically terminate in the event of its assignment. xiii. DELAWARE represents that it is duly registered with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940, as amended. The CLIENT acknowledges receipt of a copy of Part II of DELAWARE's current Form ADV, at least 48 hours prior to the signing of this Agreement. xiv. DELAWARE is a member of, and is regulated in the conduct of its investment business by, the Investment Management Regulatory Organisation Limited ("IMRO") and is bound by the Conduct of Business Rules of IMRO. Based on information that the CLIENT has furnished to DELAWARE, DELAWARE believes that the CLIENT is a "Non-Private Customer" as defined by IMRO and proposes to treat the CLIENT as such. In accordance with IMRO's rules, DELAWARE hereby notifies the CLIENT as follows: 3 (1) Unless otherwise expressly stated in the Prospectus, DELAWARE may advise on or effect transactions in units in collective investment schemes which are Unregulated Collective Investment Schemes. (2) Unless otherwise expressly stated in the Prospectus, DELAWARE may effect transactions in derivatives (meaning options, futures, contracts for differences) on the Fund's behalf only for the purposes of defensive currency hedging and/or interest rate hedging transactions, whether or not those transactions are under the rules of a Recognized or Designated Investment Exchange and whether or not those transactions are executed using a standard contract of such an Exchange. Such transactions may be "Contingent Liability Transactions" (i.e., transactions under which there is a liability to make further payments, other than charges and whether or not secured by margin, when the transaction is due to be completed or upon the earlier closing out of the position). The amount of funds which may be committed by way of margin may not exceed 20% of the value of the Fund when the investment is made. In the event that the margin required at any time exceeds 20% of the value of the Fund as a result of further margin calls at any time, DELAWARE may at its discretion close out the Fund's position. (3) The CLIENT acknowledges that, solely with respect to temporary overdrafts resulting from settlement delays, the Fund's account with its custodian bank may be overdrawn from time to time. (4) To the extent not prohibited by applicable law or the Prospectus, DELAWARE shall be entitled, without prior reference to the CLIENT, to effect transactions for the Fund in which DELAWARE has directly or indirectly a material interest (other than an interest arising solely from its participation in the transaction) or a relationship with another party which may involve a conflict with its duty to the CLIENT or the Fund. Such transactions may include, among other things, the following: (a) Buying an investment from or selling an investment to the Fund when acting as a principal or as an agent for an Associate of DELAWARE or a client thereof; (b) Acting in the same transaction as both an agent for the Fund and also as an agent for the counterparty; (c) Purchasing, holding or selling for the benefit of the Fund securities issued or guaranteed by companies in which DELAWARE or an Associate of DELAWARE, or any of their directors or employees, has an interest, through holding or dealing in its securities, serving as a director or otherwise; and (d) Purchasing, holding or selling for the benefit of the Fund securities issued by an Associate of DELAWARE or by a client of DELAWARE or any of its Associates. (5) DELAWARE has provided the CLIENT with a list of its current Soft Commission Agreements and the CLIENT acknowledges receipt of that list. DELAWARE's Soft Commission policies are described in Section 5 of this Agreement and in Part II of DELAWARE's Form ADV. 4 xv. Except as expressly otherwise provided herein any notice provided for or required hereunder shall be in writing and sent to the person and place indicated below or to such other person or place as the respective party may designate by notice hereunder. xvi. Any complaint hereunder should be referred to Mr. John Emberson, DELAWARE's Compliance Officer. If within two months after the complaint is made it has not been resolved to the CLIENT's satisfaction the complaint will be notified to IMRO. The CLIENT may make its complaint directly to the office of the Investment Ombudsman appointed by IMRO. If DELAWARE is unable to meet any liabilities to the CLIENT, the CLIENT will have such rights to compensation as may be prescribed from time to time by the Securities and Investments Board of the United Kingdom. A statement describing those rights is available from Mr. John Emberson. xvi. For purposes of this Agreement, the terms "vote of a majority of the outstanding voting securities;" "interested person;" and "assignment" shall have the meanings defined in the 1940 Act. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed on their behalf by their duly authorized representatives as of the date and the year first above written. HSBC ASSET MANAGEMENT AMERICAS DELAWARE INTERNATIONAL INC. ADVISERS LIMITED By: By: -------------------------------- ------------------------------------ Name: Name: Title: Title: Attest: Attest: ---------------------------- -------------------------------- Name: Name: Title: Title: Designee for Notice: Designee for Notice: [__________________________] David G. Tilles HSBC Asset Management Americas, Inc. Managing Director 140 Broadway Delaware International Advisers Ltd. New York, NY 10005 Third Floor USA 80 Cheapside London, EC2V 6EE England Agreed to and accepted as of the day and year first above written: HSBC Mutual Funds Trust, on behalf of HSBC International Equity Fund; By:______________________ Attest:__________________ DELAWARE INTERNATIONAL ADVISERS LTD.'S POLICY RELATING TO SOFT COMMISSION AGREEMENTS i. (1) We pay commissions to brokers because we regard commissions as a necessary incentive to secure the best performance and service from our brokers. (2) Our policy in relation to soft commission agreements is as follows: we use customers' commissions to secure services such as advice, information and research from brokers, for example, Reuters screens and various stock exchange 5 quotation services. It is our policy to use our customers' commissions to secure those services, however sourced, for the benefit of our customers. (3) We have soft dollar agreements in place with the brokers detailed in paragraph ii below, whereby we may use your commission in executing agency transactions with those brokers, and those brokers may provide to us various permitted goods or services (such as payment of our invoices for quotation services), which can reasonably be expected to assist us in the provision of investment services to our customers and which are in fact used for the benefit of our customers. (4) From time to time, we may receive additional services from other counterparties. We are satisfied that these investment related services assist us in the performance of our advisory duties and allow us to provide a cost effective service. ii. The brokers with whom we currently have soft commission agreements are: Hoenig & Company Limited Instinet Investment Services Ltd. Brockhouse & Cooper Inc. JB Were & Co. Ltd. 6 APPENDIX B MANAGEMENT FEES PAYABLE TO DELAWARE INTERNATIONAL ADVISERS LTD. BY FUNDS WITH AN OBJECTIVE SIMILAR TO HSBC INTERNATIONAL EQUITY FUND DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. - INTERNATIONAL EQUITY FUND Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------ All Assets 0.75%* *Fees reduced to 0.74% for fiscal year ended 11/30/97 due to (i) a contractual agreement to reduce fees by the fund's proportionate share of fees paid to Global & International Fund's independent directors; and (ii) a voluntary fee waiver by Delaware International. Assets as of May 31, 1998: $272.6 Million DELAWARE GROUP PREMIUM FUND, INC. - INTERNATIONAL EQUITY SERIES Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------ All Assets 0.75%* *Fees reduced to 0.69% for fiscal year ended 12/31/97 due to (i) a contractual agreement to reduce fees by the fund's proportionate share of fees paid to Premium Fund's independent directors; and (ii) a voluntary fee waiver by Delaware International. Assets as of May 31, 1998: $234.3 Million DELAWARE POOLED TRUST, INC. - THE INTERNATIONAL EQUITY PORTFOLIO Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------ All Assets 0.75%* *Delaware International's contractual agreement to reduce fees by the fund's proportionate share of fees paid to Delaware Pooled Trust's independent directors resulted in an insignificant reduction in the management fee. Voluntary fee waivers were not triggered. Assets as of May 31, 1998: $594.7 Million 1 DELAWARE POOLED TRUST, INC. - THE GLOBAL EQUITY PORTFOLIO Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------ All Assets 0.75%* *No fees were paid to Delaware International for the period from the commencement of operations on 10/15/97 through the end of The Global Equity Portfolio's fiscal year on 10/31/97 due to voluntary fee waivers by Delaware International. Assets as of May 31, 1998: $3.2 Million DELAWARE GROUP ADVISER FUNDS, INC. - OVERSEAS EQUITY FUND Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------ All Assets 0.80% Assets as of May 31, 1998: $4.5 Million LINCOLN NATIONAL INTERNATIONAL FUND, INC. Annual Fee Average Daily Net Assets (as a % of Average Daily Net Assets) - - ------------------------ ------------------------------------- $0 -$200 Million 0.50% $200 Million - $400 Million 0.40% Thereafter 0.35% Assets as of May 31, 1998: $512.5 Million 2 HSBC MUTUAL FUNDS TRUST PROXY SOLICITED BY THE BOARD OF TRUSTEES The undersigned hereby appoints Walter B. Grimm or Charles L. Booth, and each of them, proxies for the undersigned, with full powers of substitution and revocation, to represent the undersigned and to vote on behalf of the undersigned all shares of the HSBC Mutual Funds Trust (the "Fund") which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at the office of the Fund, 3435 Stelzer Road, Columbus, Ohio 43219, on September 25, 1998 at 10:00 a.m., and any adjournments thereof. The undersigned hereby acknowledges receipt of the Notice of Special Meeting and Proxy Statement and hereby instructs said attorneys and proxies to vote said shares as indicated hereon. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting. A majority of the proxies present and acting at the Meeting in person or by substitute (or, if only one shall be so present, then that one) shall have and may exercise all of the power and authority of said proxies hereunder. The undersigned hereby revokes any proxy previously given. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED NOTE: Please sign exactly as your name appears on this Proxy. If joint owners, EITHER may sign this Proxy. When signing as attorney, executor, administrator, trustee, guardian or corporate officer, please give your full title. Date________________________________________ ___________________________________________ ___________________________________________ Signature(s), (Title(s), if applicable) Please indicate your vote by an "X" in the appropriate boxes below. This Proxy, if properly executed, will be voted in the manner directed by the undersigned Shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. Please refer to the Proxy Statement for a discussion of the Proposals. 1. Approve a new Sub-Advisory Agreement between the HSBC Asset [_] [_] [_] Management Americas Inc. and Delaware International Advisers Ltd. for the APPROVE DISAPPROVE ABSTAIN HSBC International Equity Fund. 2. Approve a change to the investment objective of the Fund to seek to provide [_] [_] [_] investors with long-term capital appreciation by investing under ordinary APPROVE DISAPPROVE ABSTAIN market conditions, at least 65% of its total assets in equity securities (including American, European and Global Depositary Receipts) issued by companies base outside of the United States. 3. Approve a change in the investment policies of the Fund to remove the [_] [_] [_] restriction on the Fund purchasing securities of any company with a record of APPROVE DISAPPROVE ABSTAIN less than three years' continuous operation if such purchase would cause the Fund's investments in all such companies taken at cost to exceed 5% of the Fund's total assets taken at market value. 4. Approve a change in the investment policies of the Fund to remove the [_] [_] [_] restriction on the Fund investing in warrants in excess of 5% of the Fund's net APPROVE DISAPPROVE ABSTAIN assets, and to remove the restriction on the Fund investing in warrants which are listed on the New York or American Stock Exchanges in excess of 2% of the Fund's net assets. 5. Approve a change in the investment policies of the Fund to remove the [_] [_] [_] restriction on the Fund purchasing or retaining securities of any company APPROVE DISAPPROVE ABSTAIN which the officers and trustees of the Trust and officers and directors of the Adviser who individually own more than 1/2 of 1% of the securities of that company, together own beneficially more than 5% of such securities.
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