UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07583
HSBC ADVISOR FUNDS TRUST
(Exact name of registrant as specified in charter)
452 FIFTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices) (Zip code)
BISYS FUND SERVICES
3435 STELZER ROAD
COLUMBUS, OH 43219
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-782-8183
Date of fiscal year end: October 31, 2006
Date of reporting period: October 31, 2006
<page>
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report
OCTOBER 31, 2006
HSBC Investor Family of Funds
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HSBC INVESTOR CORE PLUS HSBC INVESTOR GROWTH FUND
FIXED INCOME FUND (ADVISOR)
HSBC INVESTOR GROWTH AND INCOME FUND
HSBC INVESTOR CORE PLUS
FIXED INCOME FUND HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR HIGH YIELD HSBC INVESTOR MID-CAP FUND
FIXED INCOME FUND
HSBC INVESTOR OPPORTUNITY FUND
HSBC INVESTOR INTERMEDIATE DURATION
FIXED INCOME FUND HSBC INVESTOR OVERSEAS EQUITY FUND
HSBC INVESTOR NEW YORK HSBC INVESTOR SMALL CAP EQUITY FUND
TAX-FREE BOND FUND
HSBC INVESTOR VALUE FUND
[HSBC LOGO]
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TABLE OF CONTENTS
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HSBC INVESTOR FAMILY OF FUNDS
ANNUAL REPORT - OCTOBER 31, 2006
Glossary of Terms
Chairman's Message ....................................................... 1
Commentary From the Certain parties ...................................... 2
Portfolio Reviews ........................................................ 3
Schedules of Portfolio Investments
HSBC Investor New York Tax-Free Bond Fund ............................. 26
HSBC Investor Growth and Income Fund .................................. 28
HSBC Investor Mid-Cap Fund ............................................ 29
Statements of Assets and Liabilities ..................................... 31
Statements of Operations ................................................. 34
Statements of Changes in Net Assets ...................................... 37
Financial Highlights ..................................................... 51
Notes to Financial Statements ............................................ 64
Report of Independent Registered Public Accounting Firm .................. 77
Other Federal Income Tax Information ..................................... 78
Table of Shareholder Expenses ............................................ 79
HSBC INVESTOR PORTFOLIOS
Schedules of Portfolio Investments
HSBC Investor Core Plus Fixed Income Portfolio ........................ 83
HSBC Investor High Yield Fixed Income Portfolio ....................... 87
HSBC Investor Intermediate Duration Fixed Income Portfolio ............ 90
HSBC Investor Growth Portfolio ........................................ 93
HSBC Investor International Equity Portfolio .......................... 94
HSBC Investor Small Cap Equity Portfolio .............................. 97
HSBC Investor Value Portfolio ......................................... 98
Statements of Assets and Liabilities ..................................... 99
Statements of Operations ................................................. 101
Statements of Changes in Net Assets ...................................... 103
Financial Highlights ..................................................... 107
Notes to Financial Statements ............................................ 108
Report of Independent Registered Public Accounting Firm .................. 115
Table of Shareholder Expenses ............................................ 116
Board of Trustees ........................................................ 118
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GLOSSARY OF TERMS
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CONSUMER PRICE INDEX ("CPI") A measure of price changes in consumer goods and
services such as gasoline, food, and automobiles. Sometimes referred to as
"headline inflation."
GROSS DOMESTIC PRODUCT (GDP) is the measure of the market value of the goods and
services produced by labor and property in the United States.
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is an unmanaged index generally
representative of the investment-grade debt issues with at least one year to
final maturity.
LEHMAN BROTHERS INTERMEDIATE U.S. AGGREGATE BOND INDEX is an unmanaged index
generally representative of investment-grade issues with maturities between
three and ten years.
LEHMAN BROTHERS NEW YORK TAX EXEMPT INDEX is an unmanaged index composed of
investment grade New York tax-exempt securities, all having a $50 million
minimum maturity value.
LIPPER GENERAL BOND FUNDS AVERAGE is comprised of managed funds that do not have
quality or maturity restrictions. The Funds primary goal is to keep the bulk of
the portfolio's assets in corporate and government debt issues.
LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS AVERAGE is an average of managed
funds that invest at least 65% of their assets in investment-grade debt issues
(rated in the top four grades) with dollar-weighted average maturities of five
to ten years.
LIPPER INTERNATIONAL LARGE-CAP CORE AVERAGE consists of funds that, by portfolio
practice, invest at least 75% of their equity assets in companies strictly
outside of the U.S. with market capitalizations (on a three-year weighted basis)
greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad
Market Index.
LIPPER LARGE-CAP CORE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) greater than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER LARGE-CAP GROWTH FUNDS AVERAGE Funds that, by portfolio practice, invest
at least 75% of their equity assets in companies with market capitalizations (on
a three-year weighted basis) greater than 300% of the dollar-weighted median
market capitalization of the middle 1,000 securities of the S&P SuperComposite
1500 Index. Large-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share
growth value, compared to the S&P 500 Index.
LIPPER MID-CAP GROWTH FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) of less than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER MULTI-CAP VALUE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest in a variety of market capitalization ranges, without
concentrating 75% of their equity assets in any one market capitalization range
over an extended period of time. Multi-Cap funds will generally have between 25%
to 75% of their assets invested in companies with market capitalizations (on a
three-year weighted basis) above 300% of the dollar-weighted median market
capitalization of the S&P MidCap 400 Index. Multi-Cap Value funds seek long-term
growth of capital by investing in companies that are considered to be
undervalued relative to a major unmanaged stock index based on price-to-current
earnings, book value, asset value, or other factors. These funds will normally
have a below-average price-to-earnings ratio, price-to-book ratio, and
three-year earnings growth figure, compared to the U S diversified multi-cap
funds universe average.
LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE is an average of managed funds that
invest at least 65% of their assets in municipal debt issues that are exempt
from taxation in New York or a city in New York.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST ("MSCI
EAFE") INDEX is an unmanaged index that measures performance of a diverse range
of developed countries in the indicated regions.
PRODUCER PRICE INDEX ("PPI") A family of indexes that measures the average
change over time in selling prices received by domestic producers of goods and
services. PPIs measure price change from the perspective of the seller.
THE RUSSELL UNIVERSE - In 1984, Russell created the Russell family of stock
indices as part of a more accurate and comprehensive system for evaluating the
performance of Certain partiess. Russell now maintains 21 U.S. stock indices and
has launched similar broad-market and style indices in Canada and Japan. Today,
more than $214 billion is invested in funds modeling Russell's U.S. indices, and
more than $1 trillion in funds is benchmarked against the global family of
Russell indices.
RUSSELL MIDCAP(R) GROWTH INDEX is an unmanaged index which measures the
performance of securities found in the Russell universe that fall in the
mid-range sector.
RUSSELL 1000(R) VALUE INDEX is unmanaged index which measures the performance of
the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total
market capitalization) with lower price-to-book ratios and lower forecasted
growth values.
RUSSELL 2500(R) GROWTH INDEX is unmanaged index which represents the smallest
2500 securities found in the Russell universe with higher price-to-book and
higher forecasted growth values.
STANDARD & POOR'S MIDCAP 400 INDEX ("S&P MIDCAP 400") is an unmanaged index
comprised of 400 domestic stocks chosen for market size (median market
capitalization of $676 million), liquidity and industry group representation.
STANDARD & POOR'S 500 INDEX ("S&P 500") is an unmanaged index that measures the
performance of the stock market as a whole.
Lipper is an independent mutual fund performance monitor whose results are based
on total return and do not reflect a sales charge.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or expenses. Securities in
the Fund do not match those in the indexes and performance of the Fund will
differ. Investors cannot invest directly in an index, although they can invest
in the underlying funds or securities.
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CHAIRMAN'S MESSAGE
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DEAR FELLOW SHAREHOLDERS:
In the world of investing, one of the keys to success is finding experienced
professionals who are dedicated to the interests of shareholders. To achieve
positive results, HSBC Investor Funds embrace the "multi-manager" process for
each of their equity funds. These equity funds engage HSBC Investments as
advisor to help select sub-advisors who have expertise in specific asset classes
of the investment universe. The fixed income and money market funds are managed
by HSBC Investments.
The Board monitors the results of HSBC Investments and each of the sub-advisors
in a variety of ways. The board reviews the investment results of each fund at
their quarterly meetings. Importantly, at most quarterly meetings, selected
sub-advisors are invited to discuss their investing philosophy, their
decision-making process and, of course, their performance. The Board is
especially interested in how these sub-advisors monitor their own internal
systems and how they communicate with HSBC Investments. The sub-advisors must
also establish a code of ethics that complies with SEC regulations.
This "hands-on" approach enables the Board to ask probing questions and to hold
the Advisor and sub-advisors accountable. The Advisor and sub-advisors
appreciate the opportunity to make their case about how they perform for the
shareholders. If performance clearly lags over a period of time, the
sub-advisors are put on notice; and, if they do not improve, they are replaced.
The mutual fund business is sometimes thought of as impersonal and
market-driven. While, certainly, the fast pace of investing requires
well-thought out and well-managed systems, it is important to understand that
people manage money for people.
In recognizing their responsibility to shareholders, the HSBC Investor Funds
believe in open and personal communication.
We encourage you to be part of this communication process. Please feel free to
contact us with your observations and concerns. We appreciate the confidence you
have shown by investing in the funds, and we want to make sure that your
confidence is warranted.
Sincerely,
/s/ Larry M. Robbins
Larry M. Robbins, Chairman, HSBC Investor Funds
1 HSBC INVESTOR FAMILY OF FUNDS
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COMMENTARY FROM THE CERTAIN PARTIES
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HSBC INVESTMENTS (USA) INC.
U.S. ECONOMIC REVIEW
Economic growth moderated during the 12-month period between November 1, 2005
and October 31, 2006, as a slowing housing market and higher interest rates and
energy prices combined to restrain the economy.
The aftereffects of hurricanes Katrina, Wilma and Rita slowed economic growth
during the final months of 2005. The economy rebounded powerfully during the
first calendar quarter of 2006, however. Gross domestic product grew by an
annualized rate of 5.8% between January and March, due to strong corporate
spending and a warm winter, which boosted housing construction.
Economic growth subsequently cooled. The once-booming housing market fell
sharply, removing what had been the economy's primary source of strength during
recent years. High energy costs also weighed on the economy. Oil prices, which
hovered around $10 a barrel as recently as 1999, climbed past $70 a barrel in
the spring as strong global demand and concerns about supply disruptions fueled
speculation.
Signs emerged during spring that the high cost of oil and other commodities had
begun to push up inflation. The increase in inflation came despite a two-year
campaign by the Federal Reserve to forestall rapid price escalation by raising
short-term interest rates. All told, the Fed increased its target Federal Funds
rate 17 times between June, 2004 and June, 2006, bringing the rate from 1.00% to
5.25%. The persistence of inflationary pressures led to concerns that the Fed,
under the guidance of new chairman Ben Bernanke, might raise interest rates far
enough to choke off economic growth.
More-benign economic and inflationary data emerged during summer, however.
Energy prices receded, due to strong levels of oil and gas supplies. The price
of a barrel of crude oil fell from more than $78 in July to less than $60 in
early fall. Meanwhile the weakening housing market contributed to slower
economic growth, productivity remained solid and wage growth stagnated. Those
developments removed much of the inflationary pressure on the economy, allowing
the Federal Reserve to leave interest rates unchanged at its meetings in August,
September and October. The U.S. economy grew at an annualized rate of 1.6%
during the third calendar quarter of 2006.
MARKET REVIEW
Stocks posted strong returns for the 12 months through October. The S&P 500
gained 16.33%, while the Russell 2000 Index of small-company stocks gained
19.98% and the MSCI EAFE Index of foreign stocks gained 28.04%.
The corporate sector was very healthy during this fiscal year. Corporations
enjoyed strong balance sheets, including large cash holdings, and generated
powerful profit and cash-flow growth. Many companies used their strong positions
to engage in shareholder-friendly activities such as mergers and acquisitions,
share repurchases and dividend increases.
Market leadership showed signs of shifting during this period. Relatively
volatile shares of small caps and foreign stocks had led the bull market that
began in 2002, while energy and materials stocks soared in recent years on the
strength of rising commodity prices. The dominance of those sections of the
market continued during the first half of this period.
Stocks experienced a correction between May and July, however, and the former
market leaders fell the farthest. Shares of large, high-quality firms held up
relatively well during the downturn, and continued to lead the market during the
summer. Technology stocks, which had suffered generally poor returns since 2000,
generated strong gains between July and October, as investors anticipating a
slow-growing economy sought shares of firms that appeared poised to generate
good earnings growth.
Shares of smaller, weaker firms rallied again late in the period, due largely to
investor optimism about the prospects for an interest-rate cut early in 2007.
Lower gasoline prices also gave a boost to consumer-oriented stocks late in the
fiscal year, by freeing up consumers' income for discretionary spending.
The S&P 500 hit its highest level in five and a half years in late September,
and the Dow Jones Industrial Average in October passed 12,000 for the first time
in its history. The stock market following the run-up between July and October
appeared fully valued, potentially providing room for growth over the coming
months but leaving little buffer to shield investors in case of negative
developments in earnings, economic growth or interest rates
HSBC INVESTOR FAMILY OF FUNDS 2
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PORTFOLIO REVIEWS
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HSBC INVESTOR CORE PLUS FIXED INCOME FUND
(ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Core Plus Fixed Income Fund (the "Fund") seeks to provide
investors with above-average total return, consistent with reasonable risk,
through investments in a diversified portfolio of fixed-income securities. The
Fund utilizes a two-tier structure, commonly known as a "master-feeder," in
which the Fund invest all of its investable assets in the HSBC Investor Core
Plus Fixed Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
For the 12-month period ended October 31, 2006, the Advisor shares of the Fund
produced a 5.56% total return, and the Class A Shares returned 5.45% (without
sales charge). That compared to a total return of 5.19% and 6.61% for the Lehman
Brothers U.S. Aggregate Bond Index(1) and the Lipper General Bond Funds
Average(1), respectively.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
GDP(1) growth fell significantly in the 4th quarter of 2005, but rebounded
dramatically in the first half of 2006. The economy continued to strengthen in
the third quarter of 2006 with GDP growth of 1.6%, albeit at a markedly slower
pace than the first half of the year. Energy prices rose through most of the
year, but they began to fall in the second half of 2006. Oil prices eased
substantially during the third quarter, even dipping below $60 and touching a
six-month low. Citing slower economic growth and falling energy prices despite
elevated core inflation, the Federal Reserve Open Market Committee kept rates at
5.25% during its last two sessions. This came on the heels of 17 straight
increases. Perhaps the most significant data pertains to the housing market,
which slowed amid rising inventories and higher mortgage rates. Home sales and
construction data came in well below expectations over the last part of the
period, indicating the housing slow down may prove to be a substantial drag on
the economy going forward. Thus far, the slowdown in the housing sector does not
appear to have spilled over into the broader economy as business and consumer
spending remain relatively healthy.
During the period interest rates were somewhat volatile, but the 10-year
Treasury rate ended (4.59%) the period at almost the point it began (4.56%).
Short-term rates rose with the Fed hikes, as the 2-year rose from 4.30% to
4.69%. This rise in rates caused a bearish flattening of the yield curve, and
created a somewhat difficult period of performance for much of the period under
review. However, a rally in rates in the third quarter helped the U.S. fixed
income market register its best quarter since the 3rd quarter of 2002, with the
Lehman Aggregate Index returning 3.81 percent. For the year, the Lehman
Aggregate Index returned 5.27%. Spreads tightened in most sectors over the
period, and all spread sectors had excess returns versus Treasury securities of
similar duration. Mortgages were the best performing sector within the Aggregate
Index, outperforming Treasuries of comparable duration by 1.01%. Lower quality
sectors performed even better, with High Yield and Emerging Market Debt beating
comparable duration Treasuries by 5.57% and 7.16% respectively.
PORTFOLIO PERFORMANCE
The Fund outperformed the benchmark for the period under review. The key
component of that outperformance was select, off-benchmark holdings in high
yield and emerging market debt. An overweight in spread sectors generally
relative to the benchmark, particularly asset backed securities and
collateralized mortgage backed securities and individual security selection in
corporate credit also had a positive impact on performance. Our short, defensive
positioning relative to the benchmark for most of the period helped performance,
as did our yield curve positioning.*
Going forward, we will maintain duration that approximates that of the
benchmark. We continue to analyze the yield curve for pricing anomalies and
subject to portfolio restrictions, we will attempt to add high quality
securitized debt issues that offer attractive yields without the issuer specific
risk of corporate bonds. Within corporates, we will continue our focus on
security selection, including select off-benchmark names that we think in a
relatively homogenized credit environment, may offer greater opportunities for
value.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
3 HSBC INVESTOR FAMILY OF FUNDS
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PORTFOLIO REVIEWS
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HSBC INVESTOR CORE PLUS FIXED INCOME FUND - AS OF OCTOBER 31, 2006
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VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH]
Lehman Brothers U.S. HSBC Investor Core Plus
Aggregate Bond Index Fixed Income Fund (Advisor)
10/31/96 10000 10000
12/31/96 10077 10231
10020 10130
10388 10521
10734 10856
12/31/97 11050 11078
11221 11240
11484 11434
11969 11709
12/31/98 12009 11837
11950 11842
11845 11669
11925 11712
12/31/99 11911 11709
12174 11927
12386 12105
12759 12512
12/31/00 13295 13024
13699 13473
13776 13609
14412 14091
12/31/01 14418 14208
14432 14167
14965 14559
15650 15172
12/31/02 15897 15426
16118 15646
16521 16084
16497 16060
12/31/03 16549 16125
16989 16508
16574 16142
17104 16620
12/31/04 17267 16812
17184 16740
17701 17222
17582 17142
12/31/05 17687 17215
17572 17163
17559 17193
18227 17811
10/31/06 18348 17961
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VALUE OF A $10,000 INVESTMENT
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[LINE GRAPH]
Lehman Brothers U.S. HSBC Investor Core Plus
Aggregate Bond Index Fixed Income Fund Class A(1)
10/31/96 10000 9526
12/31/96 10077 9651
10020 9614
10388 9958
10734 10261
12/31/97 11050 10470
11221 10627
11484 10792
11969 11064
12/31/98 12009 11141
11950 11143
11845 10969
11925 10996
12/31/99 11911 10998
12174 11162
12386 11337
12759 11695
12/31/00 13295 12164
13699 12547
13776 12668
14412 13094
12/31/01 14418 13186
14432 13138
14965 13486
15650 14017
12/31/02 15897 14247
16118 14432
16521 14822
16497 14777
12/31/03 16549 14813
16989 15152
16574 14790
17104 15223
12/31/04 17267 15387
17184 15318
17701 15737
17582 15646
12/31/05 17687 15718
17572 15652
17559 15672
18227 16220
10/31/06 18348 16369
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
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AVERAGE ANNUAL TOTAL RETURN (%)
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INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR YEAR INCEPTION
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HSBC Investor Core Plus Fixed Income Fund (Advisor) 1/9/95 5.56 4.44 6.03 6.83
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HSBC Investor Core Plus Fixed Income Fund Class A(1) 8/26/96 0.48 3.04 5.05 5.32
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HSBC Investor Core Plus Fixed Income Fund Class B(2) 1/6/98 0.67 3.29 -- 4.53
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HSBC Investor Core Plus Fixed Income Fund Class C(3) 11/4/98 3.67 3.30 -- 4.41
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Lehman Brothers U.S. Aggregate Bond Index(4) -- 5.19 4.51 6.26 N/A
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Lipper General Bond Funds Average(4) -- 6.61 5.32 5.42 N/A
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PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Funds are measured against the Lehman Brothers U.S. Aggregate Bond Index, an
unmanaged market value-weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Funds' performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 4
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PORTFOLIO REVIEWS
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HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. HIGH YIELD TEAM
HSBC Investments (USA) Inc. serves as investment adviser to the Fund. The HSBC
High Yield Team provides the day to day management of the portfolio. The Team's
philosophy is focused on delivering sustainable value added performance in the
high yield fixed income market. The investment approach is a combination of
top-down sector/industry selection and bottom-up security/quality selection. The
team rotates sectors and themes within the high yield universe during different
market environments seeking to add value, endeavoring to take advantage of
market inefficiencies in order to outperform in both up and down markets.
INVESTMENT CONCERNS
Bond funds will tend to experience smaller fluctuations in value than stock
funds. However, investors in any bond fund should anticipate fluctuations in
price, especially for longer-term issues and in environments of rising interest
rates. High yield bonds are subject to greater risks than investment grade
bonds, such as the increased risk of default because of the lower credit quality
of the issues.
MARKET COMMENTARY
The Fund delivered a total return of 8.38% (without sales charge) for Class A
Shares and 8.73% for Class I Shares from the Fund's inception on November 18,
2005 to the period ended October 31, 2006. That compared to 10.47% and 9.18% for
the Fund's benchmarks, the Merrill Lynch U.S. High Yield Master II Index(1) and
the Lipper High Current Yield Funds Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
GDP(1) growth fell significantly in the 4th quarter of 2005, but rebounded
dramatically in the first half of 2006. The economy continued to strengthen in
the third quarter of 2006 with GDP growth of 1.6%, albeit at a markedly slower
pace than the first half of the year. Energy prices rose through most of the
year, but they began to fall in the second half of 2006. Oil prices eased
substantially during the third quarter, even dipping below $60 and touching a
six-month low. Citing slower economic growth and falling energy prices despite
elevated core inflation, the Federal Reserve Open Market Committee kept rates at
5.25% during its last two sessions. This came on the heels of 17 straight
increases. Perhaps the most significant data pertains to the housing market,
which slowed amid rising inventories and higher mortgage rates. Home sales and
construction data came in well below expectations over the last part of the
period, indicating the housing slow down may prove to be a substantial drag on
the economy going forward. Thus far, the slowdown in the housing sector does not
appear to have spilled over into the broader economy as business and consumer
spending remain relatively healthy.
During the past 12-months, a decline in Treasury yields and the failure of
issuance volumes to match market expectations drove high yield spreads tighter.
With Fed policy now seemingly on extended pause, probability of a rise on
volatility by year-end has decreased. Strong equity market performance - coupled
with low volatility - have led to solid returns for the high yield asset class.
From an industry perspective, strength in the market has been broad based over
the past 12-months. The Airline (+44.46%), Broadband (+43.98%) and Cable
(+13.95%) industries posted the strongest returns.
With regard to high yield issuance, primary market activity continues to
accelerate. Notably, acquisition-related volumes accounted for more than
two-thirds of proceeds during the month. 24 new issues were priced during
October for a total of $12.9 billion, compared with 22 issues for $7.8 billion
in September. Year-to-date, 264 issues have price for a total of $104.9 billion,
compared with 303 issues for $83.6 billion same period last year. Continuing to
dominate their higher-quality counterparts, CCC-rated issues returned 2.91% for
the month of October, followed by B-rated issues up 1.32% and BB-rated issues up
1.18%. For the past 12-months, CCC-rated issuers have returned 14.29%, B-rated
bonds have returned 11.31%, and BB-rated bonds have returned 7.69%.
PORTFOLIO PERFORMANCE
The Fund underperformed the benchmark for the period under review. Performance
has been driven since inception by the fund's overweight to CCC-rated issuers
and its overweight to the Cable & Aerospace industries offset somewhat by our
underweight to the Airline industry coupled with our short duration position
relative to the benchmark.*
Going forward, we will maintain duration that approximates that of the
benchmark. We continue to analyze the yield curve for pricing anomalies and
subject to portfolio restrictions, we will attempt to add high quality
securitized debt issues that offer attractive yields without the issuer specific
risk of corporate bonds. Within corporates, we will continue our focus on
security selection, including select off-benchmark names that we think in a
relatively homogenized credit environment, may offer greater opportunities for
value.*
Our outlook for the remainder of 2006 is cautiously optimistic. We continue to
be positive about sustained economic growth, low default rates, and constructive
capital markets. Although wider spreads are an eventual certainty, we believe
that strong fundamentals and technicals will lead to a prolonged period of
compressed spread levels. On an industry front, we remain positive on the
Energy, Gaming, Wireless, and Cable sectors.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
5 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Merrill Lynch U.S. High HSBC Investor High Yield
Yield Master II Index Fixed Income Fund Class I
11/18/05 10000 10000
11/30/05 10060 9972
12/31/05 10152 10064
1/31/06 10313 10219
2/28/06 10378 10349
3/31/06 10443 10436
4/30/06 10510 10521
5/31/06 10504 10463
6/30/06 10464 10352
7/31/06 10575 10473
8/31/06 10746 10606
9/30/06 10885 10717
10/31/06 11047 10873
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Merrill Lynch U.S. High HSBC Investor High Yield
Yield Master II Index Fixed Income Fund Class A
11/18/05 10000 9524
11/30/05 10060 9497
12/31/05 10152 9583
1/31/06 10313 9728
2/28/06 10378 9850
3/31/06 10443 9931
4/30/06 10510 10010
5/31/06 10504 9952
6/30/06 10464 9845
7/31/06 10575 9958
8/31/06 10746 10082
9/30/06 10885 10185
10/31/06 11047 10322
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION SINCE
AS OF OCTOBER 31, 2006 DATE INCEPTION
- ------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class A(1) 11/18/05 3.22
- ------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class B(2) 11/21/05 3.68
- ------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class C(3) 12/14/05 6.42
- ------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class I 11/18/05 8.73
- ------------------------------------------------------------------------------
Merrill Lynch U.S. High Yield Master II Index(4) -- 10.47+
- ------------------------------------------------------------------------------
Lipper High Current Yield Funds Average(4) -- 9.18++
- ------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
+ THE SINCE INCEPTION RETURN REFLECTED FOR THE MERRILL LYNCH U.S. HIGH YIELD
MASTER II INDEX IS RUN FROM 11/18/05, WHICH IS THE CLOSEST POSSIBLE DATE
TO THE FUND'S INCEPTION DATE THAT THE INDEX IS AVAILABLE.
++ THE SINCE INCEPTION RETURN REFLECTED FOR THE LIPPER HIGH CURRENT YIELD
FUNDS AVERAGE IS RUN FROM 10/31/05, WHICH IS THE CLOSEST POSSIBLE DATE TO
THE FUND'S INCEPTION DATE THAT THE AVERAGE IS AVAILABLE.
The Fund is measured against the Merrill Lynch U.S. High Yield Master II Index
an unmanaged index which represents the broad high yield market. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities. During the period shown, certain parties waived and/or
reimbursed fees for various expenses. Had these waivers and/or reimbursements
not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 6
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Intermediate Duration Fixed Income Fund (the "Fund") seeks to
realize above-average total return, consistent with reasonable risk, by
investing in a diversified investment grade portfolio of U.S. government
obligations, corporate bonds and mortgage-backed securities. The Fund utilizes a
two tier structure, commonly known as "master-feeder," in which the Fund invests
all of its investable assets in the HSBC Investor Intermediate Duration Fixed
Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 5.30% (without sales charge) for the Class A Shares and 5.56%
for the Class I Shares during the 12-month period ended October 31, 2006. That
compared to a total return of 5.12% for Lehman Brothers Intermediate U.S.
Aggregate Bond Index.(1)
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
GDP(1) growth fell significantly in the 4th quarter of 2005, but rebounded
dramatically in the first half of 2006. The economy continued to strengthen in
the third quarter of 2006 with GDP growth of 1.6%, albeit at a markedly slower
pace than the first half of the year. Energy prices rose through most of the
year, but they began to fall in the second half of 2006. Oil prices eased
substantially during the third quarter, even dipping below $60 and touching a
six-month low. Citing slower economic growth and falling energy prices despite
elevated core inflation, the Federal Reserve Open Market Committee kept rates at
5.25% during its last two sessions. This came on the heels of 17 straight
increases. Perhaps the most significant data pertains to the housing market,
which slowed amid rising inventories and higher mortgage rates. Home sales and
construction data came in well below expectations over the last part of the
period, indicating the housing slow down may prove to be a substantial drag on
the economy going forward. Thus far, the slowdown in the housing sector does not
appear to have spilled over into the broader economy as business and consumer
spending remain relatively healthy.
During the period interest rates were somewhat volatile, but the 10-year
Treasury rate ended (4.59%) the period at almost the point it began (4.56%).
Short-term rates rose with the Fed hikes, as the 2-year rose from 4.30% to
4.69%. This rise in rates caused a bearish flattening of the yield curve, and
created a somewhat difficult period of performance for much of the period under
review. However, a rally in rates in the third quarter helped the U.S. fixed
income market register its best quarter since the 3rd quarter of 2002, with the
Lehman Aggregate Index returning 3.81 percent. For the year, the Lehman
Aggregate Index returned 5.27%. Spreads tightened in most sectors over the
period, and all spread sectors had excess returns versus Treasury securities of
similar duration. Mortgages were the best performing sector within the Aggregate
Index, outperforming Treasuries of comparable duration by 1.01%. Lower quality
sectors performed even better, with High Yield and Emerging Market Debt beating
comparable duration Treasuries by 5.57% and 7.16% respectively.
PORTFOLIO PERFORMANCE
The Fund outperformed the benchmark for the period under review. The key
component of that outperformance was select, off-benchmark holdings in high
yield and emerging market debt. An overweight in spread sectors generally
relative to the benchmark, particularly asset backed securities and
collateralized mortgage backed securities and individual security selection in
corporate credit also had a positive impact on performance. Our short, defensive
positioning relative to the benchmark for most of the period helped performance,
as did our yield curve positioning.*
Going forward, we will maintain duration that approximates that of the
benchmark. We continue to analyze the yield curve for pricing anomalies and
subject to portfolio restrictions, we will attempt to add high quality
securitized debt issues that offer attractive yields without the issuer specific
risk of corporate bonds. Within corporates, we will continue our focus on
security selection, including select off-benchmark names that we think in a
relatively homogenized credit environment, may offer greater opportunities for
value.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
7 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Lehman Brothers Intermediate HSBC Investor Intermediate
U.S. Aggregate Bond Index Duration Fixed Income Fund Class I
1/23/01 10000 10000
10147 10237
10230 10278
10690 10813
12/31/01 10696 10767
10731 10701
11115 10988
11535 11451
12/31/02 11711 11581
11860 11705
12084 11974
12106 11953
12/31/03 12157 11969
12433 12214
12188 11969
12515 12268
12/31/04 12612 12355
12542 12260
12845 12534
12795 12483
12/31/05 12866 12514
12833 12514
12848 12555
13286 13003
10/31/06 13368 13101
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Lehman Brothers Intermediate HSBC Investor Intermediate
U.S. Aggregate Bond Index Duration Fixed Income Fund Class A(2)
2/7/01 10000 9526
10147 9691
10230 9732
10690 10198
12/31/01 10696 10159
10731 10080
11115 10355
11535 10775
12/31/02 11711 10900
11860 11001
12084 11257
12106 11230
12/31/03 12157 11238
12433 11461
12188 11214
12515 11499
12/31/04 12612 11573
12542 11477
12845 11727
12795 11671
12/31/05 12866 11694
12833 11687
12848 11717
13286 12128
10/31/06 13368 12217
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR INCEPTION
- ------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class A(1) 2/7/01 0.32 2.34 3.56
- ------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class B(2) 2/15/01 0.40 2.57 3.64
- ------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class C(3) 2/13/01 3.51 2.59 3.62
- ------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class I 1/23/01 5.56 3.60 4.79
- ------------------------------------------------------------------------------------------------------
Lehman Brothers Intermediate U.S. Aggregate Bond Index(4) -- 5.12 4.25 N/A
- ------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 4.62 3.96 N/A
- ------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
4.00%.
(3) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Fund is measured against the Lehman Brothers Intermediate U.S. Aggregate
Bond Index, an unmanaged index generally representative of investment-grade
issues with maturities between three and ten years. The performance of the index
does not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities. During the period shown, certain parties waived and/or reimbursed
fees for various expenses. Had these waivers and/or reimbursements not been in
effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 8
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide
shareholders with income exempt from regular, federal, New York state and New
York city personal income taxes.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund's income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax. Regional funds may be
subject to additional risks, since the issues they invest in are located in one
geographical location.
MARKET COMMENTARY
The Fund delivered a total return of 4.45% (without sales charge) for Class A
Shares and 4.71% for Class I Shares for the 12-month period ended October 31,
2006. That compared to 4.38% and 5.51% for the Fund's benchmarks, the Lehman
Brothers New York Tax Exempt Index(1) and the Lipper New York Municipal Debt
Funds Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
GDP(1) growth fell significantly in the 4th quarter of 2005, but rebounded
dramatically in the first half of 2006. The economy continued to strengthen in
the third quarter of 2006 with GDP growth of 1.6%, albeit at a markedly slower
pace than the first half of the year. Energy prices rose through most of the
year, but they began to fall in the second half of 2006. Oil prices eased
substantially during the third quarter, even dipping below $60 and touching a
six-month low. Citing slower economic growth and falling energy prices despite
elevated core inflation, the Federal Reserve Open Market Committee kept rates at
5.25% during its last two sessions. This came on the heels of 17 straight
increases. Perhaps the most significant data pertains to the housing market,
which slowed amid rising inventories and higher mortgage rates. Home sales and
construction data came in well below expectations over the last part of the
period, indicating the housing slow down may prove to be a substantial drag on
the economy going forward. Thus far, the slowdown in the housing sector does not
appear to have spilled over into the broader economy as business and consumer
spending remain relatively healthy.
During the period interest rates were somewhat volatile, but the 10-year
Treasury rate ended (4.59%) the period at almost the point it began (4.56%).
Short-term rates rose with the Fed hikes, as the 2-year rose from 4.30% to
4.69%. This rise in rates caused a bearish flattening of the yield curve, and
created a somewhat difficult period of performance for much of the period under
review. However, a rally in rates in the third quarter helped the US fixed
income market register its best quarter since the 3rd quarter of 2002, with the
Lehman Aggregate Index returning 3.81 percent.
Following the lead of the Treasury curve, the municipal curve flattened even
more dramatically. The yield on two year generic AAA bonds rose 42 basis points
(0.42%) in the period to close at 3.50%, while the ten year yield declined by 15
basis points (0.15%), ending at 3.80% on October 31st.
PERFORMANCE REVIEW
The Fund underperformed its benchmark for the period of review. One of the
contributors to performance during the annual period was the duration
positioning of the portfolio. Gains from duration were offset by the portfolio's
higher quality profile relative to the benchmark and continued positive
performance of lower rated credits and sectors. The portfolio's barbelled
positioning marginally enhanced returns as the municipal yield curve continued
to flatten. Finally sector allocation detracted from performance as the
portfolio tended to be overweight in lower volatility and higher quality
sectors. Lower quality revenue sectors such as tobacco securitization, hospital,
and resource recovery bonds all outperformed as quality spreads continued to
compress.*
Going forward, we will maintain duration that approximates that of the
benchmark. We intend to add higher yielding insured paper and mixed collateral
pre-refunded bonds on a tactical basis. Additionally, we are considering various
bond strategies in light of the potential impact of the alternative minimum
tax.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
9 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Lehman Brothers New York HSBC Investor N.Y. Tax-Free
Tax Exempt Index Bond Fund Class I
10/31/96 10000 10000
12/31/96 10145 10126
10126 10068
10510 10436
10839 10767
12/31/97 11143 11073
11291 11190
11476 11349
11828 11754
12/31/98 11909 11786
12017 11860
11804 11599
11759 11466
12/31/99 11667 11423
12021 11758
12208 11850
12494 12128
12/31/00 13069 12660
13357 12931
13467 13001
13768 13313
12/31/01 13702 13175
13870 13315
14342 13710
15021 14411
12/31/02 15026 14393
15211 14541
15589 14936
15619 14885
12/31/03 15819 15068
16079 15259
15704 14948
16308 15441
12/31/04 16494 15564
16485 15494
16947 15888
16919 15835
12/31/05 17043 15922
17093 15918
17095 15887
17660 16400
10/31/06 17766 16478
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Lehman Brothers New York HSBC Investor N.Y. Tax-Free
Tax Exempt Index Bond Fund Class A(1)
10/31/96 10000 9528
12/31/96 10145 9644
10126 9584
10510 9932
10839 10254
12/31/97 11143 10533
11291 10629
11476 10773
11828 11152
12/31/98 11909 11175
12017 11238
11804 10983
11759 10849
12/31/99 11667 10801
12021 11111
12208 11191
12494 11447
12/31/00 13069 11941
13357 12190
13467 12248
13768 12534
12/31/01 13702 12396
13870 12520
14342 12884
15021 13533
12/31/02 15026 13508
15211 13639
15589 14000
15619 13943
12/31/03 15819 14107
16079 14276
15704 13977
16308 14429
12/31/04 16494 14535
16485 14460
16947 14819
16919 14761
12/31/05 17043 14832
17093 14819
17095 14781
17660 15248
10/31/06 17766 15318
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR YEAR INCEPTION
- --------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -0.49 2.92 4.36 4.76
- --------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -0.33 3.16 -- 3.77
- --------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 2.66 3.15 -- 3.36
- --------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class I 7/1/96 4.71 4.19 5.12 5.23
- --------------------------------------------------------------------------------------------------
Lehman Brothers New York Tax Exempt Index(4) -- 4.38 5.10 5.97 N/A
- --------------------------------------------------------------------------------------------------
Lipper New York Municipal Debt Funds Average(4) -- 5.51 4.46 5.05 N/A
- --------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Fund is measured against the Lehman Brothers New York Tax Exempt Index, an
unmanaged index composed of investment grade New York tax-exempt securities, all
having a $50 million minimum maturity value. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 10
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY PHILIP J. SANDERS, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA AND
DANIEL P. BECKER, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
The HSBC Investor Growth Fund (the "Fund") seeks long-term growth of capital by
investing primarily in U.S. and foreign equity securities of high quality
companies with market capitalization generally in excess of $2 billion, which
the sub-adviser believes have the potential to generate superior levels of
long-term profitability and growth. The Fund utilizes a two tier structure,
commonly known as a "master-feeder", and invests all of its assets in the HSBC
Investor Growth Portfolio (the "Portfolio"), which acts as the master fund. The
Portfolio employs Waddell & Reed Investment Management Company (Waddell & Reed)
as sub-adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
MARKET COMMENTARY
The Fund returned 6.92% (without sales charge) for the Class A Shares and 7.21%
for the Class I Shares for the 12-month period ended October 31, 2006. That
compared to a 16.33% return for the Standard & Poor's 500 Index(1), 10.84% for
the Russell 1000(R) Growth Index(1) and a 7.42% return for the Lipper Large-Cap
Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Growth stocks produced solid returns during the fiscal year, although growth
shares trailed value stocks by a wide margin. Growth stocks gained ground during
the first six months of the period, declined during spring, and then recovered
during late summer and early fall. All told, growth stocks posted returns
roughly in line with historical averages, helping this Fund post a healthy gain.
Strong performance from financial stocks boosted the absolute performance of the
Fund and its benchmark, while weakness in the health care sector generated a
substantial drag on absolute returns.*
Stock selection in the energy sector boosted returns against the benchmark
index, and a relatively large position in energy stocks helped lift the Fund's
relative performance as well. Strong security selection in the materials sector
also boosted returns during the 12-month period under review.*
Stock selection in the health care sector produced the largest drag on
performance versus the benchmark. Poor performance by the health care stocks in
the Fund's portfolio more than offset the positive impact provided by an
underweight allocation to the health care sector. Security selection in the
information technology and financials sectors also weighed on returns against
the benchmark during the fiscal year.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
11 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Standard & Poor's 500 Index Russell 1000(R) Growth Index HSBC Investor Growth Fund Class I
5/10/04 10000 10000 10000
10334 10314 10486
10141 9775 9944
12/31/04 11077 10671 10629
10839 10235 10340
10987 10487 10805
11383 10908 11190
12/31/05 11620 11233 11849
12109 11580 12248
11934 11129 12012
12610 11567 11898
10/31/06 13020 11973 12142
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Standard & Poor's 500 Index Russell 1000(R) Growth Index HSBC Investor Growth Fund Class A
5/10/04 10000 10000 9500
10334 10314 9962
10141 9775 9440
12/31/04 11077 10671 10085
10839 10235 9805
10987 10487 10241
11383 10908 10598
12/31/05 11620 11233 11222
12109 11580 11593
11934 11129 11361
12610 11567 11246
10/31/06 13020 11973 11469
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR INCEPTION
- --------------------------------------------------------------------------------
HSBC Investor Growth Fund Class A(1) 5/10/04 1.59 5.69
- --------------------------------------------------------------------------------
HSBC Investor Growth Fund Class B(2) 5/10/04 2.16 6.35
- --------------------------------------------------------------------------------
HSBC Investor Growth Fund Class C(3) 5/10/04 5.13 7.08
- --------------------------------------------------------------------------------
HSBC Investor Growth Fund Class I 5/10/04 7.21 8.15
- --------------------------------------------------------------------------------
Russell 1000(R) Growth Index(4) -- 10.84 N/A
- --------------------------------------------------------------------------------
Standard & Poor's 500 Index(4) -- 16.33 N/A
- --------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(4) -- 7.42 N/A
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Fund is measured against the Russell 1000(R) Growth Index and the Standard &
Poor's 500 Index. The Russell 1000(R) Growth Index measures the performance of
those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. The Standard & Poor's 500 Index is generally
representative of the U.S. stock market as a whole. The indices are unmanaged
and do not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities. During the period shown, certain parties waived and/or reimbursed
fees for various expenses. Had these waivers and/or reimbursements not been in
effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 12
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY GARY U. ROLLE, CFA, PRINCIPAL/CHIEF INVESTMENT OFFICER AND
EDWARD S. HAN, PRINCIPAL/PORTFOLIO MANAGER AND
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least
65% of its total assets in common stocks, preferred stocks, and convertible
securities. The Fund may invest the balance of its assets in various types of
fixed income securities and in money market instruments. The Fund employs
Transamerica Investment Management, LLC ("TIM") as the sub-adviser to the Fund.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 12.62% (without sales charge) for the Class A Shares and
12.88% for the Class I Shares for the 12-month period ended October 31, 2006.
That compared to a 16.33% return for the Standard & Poor's 500 Index(1) and a
14.23% return for the Lipper Large-Cap Core Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Stocks generally performed well during the fiscal year, despite uncertainty
about the direction of interest rates and concerns about inflation. The stock
market generated healthy gains during the first half of the 12-month period,
endured a correction in the spring, and then rebounded during late summer and
early fall. That environment helped this Fund post strong absolute returns for
the period as a whole. Investments in energy and technology stocks generated the
majority of the Fund's gain.*
The Fund held larger positions than the benchmark in shares of consumer
discretionary and industrial firms. Stocks in the industrial sector performed
well, boosting the Fund's returns relative to the index. Stocks in the consumer
discretionary sector did not perform as well, ultimately detracting from
relative performance.*
Stock selection in the energy sector provided the greatest contribution to
relative returns during the 12-month period as a whole. The Fund also held an
overweight stake in energy stocks. That position boosted returns versus the
index when energy stocks surged early in the period, but weighed on relative
performance during the second half of the fiscal year as falling oil and gas
prices led investors to sell energy shares. Selection in the health care sector
dragged on performance against the S&P 500, as particular biotechnology and
pharmaceutical stocks lagged the broad market.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
13 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor Growth and
Income Fund Class I Standard & Poor's 500 Stock Index
4/2/01 10000 10000
10588 10585
9019 9032
12/31/01 9598 9997
9436 10024
8138 8682
6675 7183
12/31/02 7180 7788
7067 7543
8114 8704
8227 8934
12/31/03 9091 10021
9174 10191
9178 10366
8940 10172
12/31/04 9784 11111
9492 10872
9590 11021
10355 11418
12/31/05 10780 11656
11357 12146
11105 11971
11126 12649
10/31/06 11535 13061
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor Growth and
Income Fund Class A (Investor)(1) Standard & Poor's 500 Stock Index
4/2/01 9498 10000
9730 10585
8277 9032
12/31/01 8811 9997
8653 10024
7459 8682
6117 7183
12/31/02 6575 7788
6462 7543
7423 8704
7517 8934
12/31/03 8299 10021
8365 10191
8377 10366
8150 10172
12/31/04 8922 11111
8646 10872
8733 11021
9419 11418
12/31/05 9801 11656
10316 12146
10077 11971
10096 12649
10/31/06 10468 13061
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR INCEPTION
- --------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class A(1) 4/12/01 7.02 3.69 0.83
- --------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class B(2) 4/5/01 7.76 3.98 1.52
- --------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class C(3) 11/3/03 10.65 -- 8.89
- --------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class I 4/2/01 12.88 5.02 2.59
- --------------------------------------------------------------------------------------
Standard & Poor's 500 Index(4) -- 16.33 7.25 N/A
- --------------------------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(4) -- 14.23 5.78 N/A
- --------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index
that is generally representative of the U.S. stock market as a whole. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 14
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR OVERSEAS EQUITY FUND (ADVISOR, CLASS A SHARES, B SHARES, AND C
SHARES)
BY KEVIN F. SIMMS
CO-CIO INTERNATIONAL VALUE EQUITIES AND DIRECTOR OF RESEARCH - GLOBAL AND
INTERNATIONAL VALUE EQUITIES ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND
MANAGEMENT
The HSBC Investor International Equity Fund and the HSBC Investor Overseas
Equity Fund (the "Funds") seek to provide their shareholders with long-term
growth of capital and future income by investing primarily in securities of
non-U.S. issuers and securities of issuers whose principal markets are outside
of the United States. The Funds employ a two-tier fund structure, known as
"master-feeder," in which the Funds invest all of their investable assets in the
HSBC Investor International Equity Portfolio (the "Portfolio"). The Portfolio
employs AllianceBernstein Investment Research and Management
("AllianceBernstein"), a unit of AllianceBernstein Investment Research and
Management as sub-investment adviser.
The Portfolio invests primarily in equity securities of companies organized and
domiciled in developed nations outside the U.S., or for which the principal
trading market is outside the U.S., including Europe, Canada, Australia and the
Far East.
INVESTMENT CONCERNS
There are risks associated with investing in foreign companies, such as erratic
market conditions, economic and political instability and fluctuations in
currency and exchange rates.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
MARKET COMMENTARY
For the 12-month period ended October 31, 2006, the Advisor shares of the HSBC
Investor International Equity Fund produced a 32.70% return and the Class A
Shares of the HSBC Investor Overseas Equity Fund returned 31.85% (without sales
charge). That compared to a total return of 28.04% and 25.62% for the Funds'
benchmarks, the MSCI EAFE Index(1) and the Lipper International Large-Cap Core
Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Robust global economic growth, strong corporate profits and modest inflation
helped international stock markets perform well during the fiscal year. Foreign
stocks posted strong gains during the first half of the period, declined in
spring, and then rebounded as benign global economic data, lower oil prices and
moderate interest rates fueled investor optimism. That environment helped this
Fund post very strong absolute returns for the 12-month period as a whole.*
Stock selection drove the Fund's superior relative performance. The Fund's
sub-advisor employs deep fundamental research to uncover value opportunities
across a broad range of industries throughout global stock markets. The
portfolio's holdings in the industrial commodities sector benefited from surging
commodity prices and strong earnings, and significantly boosted returns relative
to the benchmark. Security selection in the financial, consumer staples and
utilities sectors also lifted the Fund's relative performance.*
An overweight position in the energy sector weighed on the Fund's relative
gains. Energy stocks produced strong returns early in the period, but gave up
much of that gain when crude-oil prices softened between July and October. That
development led the energy sector to trail the broad market for the period as a
whole. The energy stocks in the Fund's portfolio outperformed the energy stocks
in the benchmark, but that positive selection effect did not fully offset the
negative impact of the relatively large sector weighting. Likewise, an
underweight stake in the construction and housing sector dragged on relative
performance, despite strong security selection within that sector.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
15 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR OVERSEAS EQUITY FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
MSCI EAFE Index HSBC Investor International Equity Fund
10/31/96 10000 10000
12/31/96 10269 10561
10116 10925
11436 12637
11363 12874
12/31/97 10480 11586
12030 13428
12166 13200
10444 11112
12/31/98 12611 13027
12796 14153
13130 15671
13715 17026
12/31/99 16054 22278
16046 23092
15420 21901
14185 19275
12/31/00 13813 17901
11927 15830
11824 15830
10174 13168
12/31/01 10884 14773
10997 14884
10734 14150
8621 11071
12/31/02 9180 12059
8434 10894
10084 12795
10909 13519
12/31/03 12775 15600
13338 16229
13397 16322
13366 16887
12/31/04 15420 19300
15405 19430
15289 19170
16885 21583
12/31/05 17581 22457
19246 25272
19427 25197
20202 26393
10/31/06 20989 27526
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
MSCI EAFE Index HSBC Investor Overseas Equity Fund Class A(1)
10/31/96 10000 9504
12/31/96 10269 9989
10116 10242
11436 11760
11363 11938
12/31/97 10480 10779
12030 12450
12166 12213
10444 10247
12/31/98 12611 11917
12796 12906
13130 14257
13715 15436
12/31/99 16054 20106
16046 20760
15420 19711
14185 17314
12/31/00 13813 16047
11927 14164
11824 14132
10174 11743
12/31/01 10884 13151
10997 13239
10734 12596
8621 9972
12/31/02 9180 10858
8434 9725
10084 11265
10909 12091
12/31/03 12775 13939
13338 14480
13397 14546
13366 15021
12/31/04 15420 17131
15405 17225
15289 16955
16885 19054
12/31/05 17581 19781
19246 22236
19427 22121
20202 23131
10/31/06 20989 24103
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share classes versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR YEAR INCEPTION
- -------------------------------------------------------------------------------------------------
HSBC Investor International Equity Fund (Advisor) 1/9/95 32.70 14.88 10.66 10.85
- -------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 25.26 13.30 9.20 9.18
- -------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 26.87 13.60 -- 8.87
- -------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 29.92 13.61 -- 9.16
- -------------------------------------------------------------------------------------------------
MSCI EAFE Index(4) -- 28.04 15.00 7.70 N/A
- -------------------------------------------------------------------------------------------------
Lipper International Large-Cap Core Average(4) -- 25.62 12.10 7.10 N/A
- -------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Funds are measured against the Morgan Stanley Capital International (MSCI)
Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that
measures performance of a diverse range of developed countries in the indicated
regions. The performance of the index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Funds' performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index, although
they can invest in its underlying securities. During the period shown, certain
parties waived and/or reimbursed fees for various expenses. Had these waivers
and/or reimbursements not been in effect, performance quoted would have been
lower.
HSBC INVESTOR FAMILY OF FUNDS 16
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
(CLASS A SHARES, B SHARES, C SHARES AND TRUST SHARES)
BY TONY Y. DONG, CFA, DIRECTOR, MID-CAP EQUITY AND SENIOR PORTFOLIO MANAGER AND
BRIAN S. MATUSZAK, CFA, SENIOR EQUITY ANALYST AND
ANDY Y. MUI, CPA, SENIOR EQUITY ANALYST
MUNDER CAPITAL MANAGEMENT
The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve its objective by
investing in common or preferred stocks and convertible securities. The Fund
will normally invest at least 80% of its assets in equity securities of
mid-sized companies with market capitalizations falling within the range of the
S&P MidCap 400 Index (between $270 million and $8.6 billion as of March 31,
2005) at the time of acquisition. Investments are primarily in domestic common
stocks but also may include, to a limited degree, preferred stocks, and
convertible securities. The Portfolio employs Munder Capital Management
("Munder") as sub-investment adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Mid capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
The Fund's Class A Shares posted a return of 13.66% (without sales charge) and
13.97% for the Trust Shares for the 12-month period ended October 31, 2006. That
compares to 13.43% and 11.51% for the Fund's benchmarks, the S&P MidCap 400
Index(1) and the Lipper Mid-Cap Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Medium-sized stocks posted strong gains for the fiscal year as a whole, despite
a correction between May and July. That environment helped this Fund generate
good absolute returns. Mid-cap stocks significantly out-gained larger shares
during the first half of the period, as investors began to anticipate that the
Federal Reserve would stop raising interest rates. The broad stock market
slumped in spring, however, as investors worried about inflation and the
potential for higher interest rates. That decline contributed to losses for this
Fund during the second calendar quarter of 2006. Falling oil prices and lower
equity market volatility led investors to adopt a more aggressive stance during
the final months of the period, helping the Fund earn back much of its spring
loss. For the 12-month period under review, the Fund's holdings in all ten
economic sectors posted positive absolute returns.*
Strong stock selection allowed the Fund to outperform its benchmark. Security
selection in the health care, industrials, materials, consumer discretionary and
telecommunications sectors boosted relative returns. That said, selection within
the energy sector was the largest single detractor to relative performance, due
to weak performance by two energy stocks. We under-weighted utilities stocks,
which generally do not possess the high-growth characteristics we demand.
Utilities stocks performed well, so the Fund's relatively small stake in that
sector weighed somewhat on returns against the benchmark.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
17 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Standard & Poor's Russell MidCap(R) HSBC Investor Mid-Cap HSBC Investor Mid-Cap
MidCap 400 Index Growth Index Fund Class A(1) Fund Trust
10/31/96 10000 10000 9492 10000
12/31/96 10575 10411 9691 10235
10418 10031 10044 10610
11949 11508 11611 12254
13870 13118 12892 13615
12/31/97 13986 12758 12671 13404
15526 14280 13885 14695
15193 14271 14194 15023
12995 11889 11589 12277
12/31/98 16659 15037 13841 14671
15596 15550 14437 15305
17804 17170 16159 17160
16309 16311 15055 15962
12/31/99 19111 22749 19117 20305
21536 27555 22561 23967
20826 25514 22075 23474
23356 26158 23554 25070
12/31/00 22457 20076 21198 22565
20038 15040 19316 20564
22674 17474 21355 22732
18918 12616 17456 18610
12/31/01 22321 16031 19204 20468
23822 15748 19092 20373
21605 12872 16403 17514
18030 10661 13445 14368
12/31/02 19082 11638 13983 14940
18236 11636 13624 14583
21450 13818 15686 16799
22864 14807 16403 17561
12/31/03 25879 16608 18420 19730
27189 17411 19047 20421
27453 17594 19338 20730
26877 16832 18397 19753
12/31/04 30144 19179 20997 22541
30024 18859 20705 22232
31305 19506 21960 23590
32832 20783 23058 24781
12/31/05 33929 21499 23157 24911
36517 23135 25648 27613
35369 22049 24601 26472
34987 22245 24318 26202
10/31/06 36441 23099 25139 27102
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR YEAR INCEPTION
- --------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 7.98 6.16 9.66 10.75
- --------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 9.25 6.46 9.40 10.37
- --------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 12.04 6.62 9.48 10.41
- --------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Trust 7/1/93 13.97 7.53 10.48 11.45
- --------------------------------------------------------------------------------------
Standard & Poor's MidCap 400 Index(4) -- 13.43 13.03 13.80 N/A
- --------------------------------------------------------------------------------------
Russell MidCap(R) Growth Index(4) -- 14.51 10.62 8.73 N/A
- --------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 11.51 7.79 7.33 N/A
- --------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
+ For periods prior to July 1, 2000, the performance shown above includes
the total return (adjusted for Fund expenses) generated by HSBC Investments
(USA) Inc's management of a pooled investment vehicle called a collective
investment trust (CTF) with the same investment objective as the Fund. The
assets from that CTF were converted into the HSBC Investor Mid-Cap Fund on July
1, 2000. The CTF was not registered with the Securities & Exchange Commission
(SEC) and thus was not subject to certain investment restrictions that are
imposed on the Fund. If the CTF had been registered with the SEC, its
performance might have been adversely affected. Performance assumes reinvestment
of dividends and distributions.
The Fund has changed its standardized benchmark from the Russell MidCap(R)
Growth Index to the Standard & Poor's MidCap 400 Index ("S&P MidCap 400") to
provide a more appropriate market comparison. The S&P MidCap 400 Index is
comprised of 400 domestic stocks chosen for market size (median market
capitalization of $676 million), liquidity and industry group representation.
The Russell MidCap(R) Growth Index tracks the performance of those Russell
securities in the Russell Universe(4) with higher price-to-book ratios and
higher forecasted growth values. The performance of the indices does not reflect
the deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 18
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR SMALL CAP EQUITY FUND
HSBC INVESTOR OPPORTUNITY FUND (ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY WILLIAM A. MUGGIA
PRESIDENT-CHIEF INVESTMENT OFFICER
WESTFIELD CAPITAL MANAGEMEN
The HSBC Investor Small Cap Equity Fund and the HSBC Investor Opportunity Fund
("the Funds") seek to provide their shareholders with long-term growth of
capital by investing in equity securities of emerging small and medium-sized
companies expected to deliver earnings growth well above the growth rate of the
economy and the rate of inflation. The Funds employ a two-tier structure,
commonly referred to as "master-feeder." The Funds invest all of their
investable assets in the HSBC Investor Small Cap Equity Portfolio (the
"Portfolio"). The Portfolio employs Westfield Capital Management Company, LLC as
sub-investment adviser.
The Portfolio invests primarily in common stocks of small and medium-sized
companies that may have the potential to become major enterprises.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Small-capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
For the 12-month period ended October 31, 2006, the Advisor shares of the HSBC
Investor Small Cap Equity Fund produced a 19.40% return and the Class A Shares
of the HSBC Investor Opportunity Fund produced a 18.81% return (without sales
charge). The Funds' benchmarks, the Russell 2500(R) Growth Index(1) and the
Lipper Mid-Cap Growth Funds Average(1), returned 15.56% and 11.51%,
respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Small-cap stocks performed well, helping this Fund and its benchmark post strong
returns. Technology and health care stocks provided the largest contributions to
the Fund's gains.*
Stock selection in the health care sector boosted returns against the benchmark.
The benchmark's health care allocation lagged the index as a whole, but strong
performance by the Fund's holdings in various health care industries, including
biotechnology, pharmaceuticals, health care equipment, health care facilities
and life science tools & services, helped the Fund's heath care stake outperform
the benchmark and add significantly to relative gains.*
Selection among technology stocks also boosted relative returns. The
sub-advisor's selection of stocks in the communications equipment, applications
software and data processing & outsourced services industries particularly
lifted the Fund's return versus its benchmark.*
An underweight stake in the consumer discretionary sector helped the Fund
out-perform its benchmark index as well. Consumer discretionary stocks trailed
the index for the period as a whole, despite a surge late in the period. Stock
selection in this sector also boosted relative returns.*
The Fund had no exposure to the telecommunications services or consumer staples
sectors, and owned only one stock in the materials sector. Those three sectors
led the benchmark for the 12-month period under review, so the Fund's
underweight positions dragged on relative performance. An underweight stake in
financials also weighed on relative returns, as did security selection in that
sector. Selection among industrials weakened performance against the benchmark
as well.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
19 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR SMALL CAP EQUITY FUND
HSBC INVESTOR OPPORTUNITY FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Russell 2500(R) Growth Index HSBC Investor Small Cap Equity Fund
10/31/96 10000 10000
12/31/96 10417 10220
9584 9699
11141 11772
12995 13428
12/31/97 11955 12546
13287 14444
12639 14444
9832 11549
12/31/98 12325 14231
12195 13011
14245 15209
13750 14376
12/31/99 19163 21089
22066 23528
20541 23555
19937 24151
12/31/00 16080 22152
12877 19083
15616 22633
11388 17043
12/31/01 14338 21862
13914 21413
11600 17477
9389 14489
12/31/02 10166 14618
9841 14248
12077 17268
13281 18585
12/31/03 14875 20336
15693 21156
15714 21188
14833 20176
12/31/04 17045 22762
16307 22023
16888 23099
17950 25364
12/31/05 18438 25718
20619 28637
19356 27609
19123 27708
10/31/06 20065 28653
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor Opportunity
Russell 2500(R) Growth Index Fund Class A(1)
10/31/96 10000 9496
12/31/96 10417 9695
9584 9190
11141 11129
12995 12651
12/31/97 11955 11814
13287 13588
12639 13588
9832 10846
12/31/98 12325 13347
12195 12177
14245 14216
13750 13411
12/31/99 19163 19629
22066 21857
20541 21904
19937 22417
12/31/00 16080 20471
12877 17601
15616 20836
11388 15670
12/31/01 14338 20071
13914 19636
11600 16001
9389 13270
12/31/02 10166 13375
9841 12992
12077 15705
13281 16888
12/31/03 14875 18436
15693 19166
15714 19184
14833 18244
12/31/04 17045 20540
16307 19844
16888 20784
17950 22801
12/31/05 18438 23076
20619 25674
19356 24707
19123 24760
10/31/06 20065 25602
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share classes versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR YEAR YEAR INCEPTION
- --------------------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund (Advisor) 9/3/96 19.40 9.52 11.10 11.59
- --------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class A(1) 9/23/96 12.89 7.80 9.86 9.53
- --------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class B(2) 1/6/98 13.91 8.09 -- 8.74
- --------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class C(3) 11/4/98 16.92 8.11 -- 9.58
- --------------------------------------------------------------------------------------------
Russell 2500(R) Growth Index(4) -- 15.56 9.91 7.21 N/A
- --------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 11.51 7.79 7.33 N/A
- --------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Funds are measured against the Russell 2500(R) Growth Index, an unmanaged
index that tracks the performance of 2500 securities found in the Russell
Universe(4) with higher price-to-book and higher forecasted growth values. The
performance for the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Funds' performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 20
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY JON D. BOSSE, CFA
CHIEF INVESTMENT OFFICER
NWQ INVESTMENT MANAGEMENT CO., LLC
The HSBC Investor Value Fund (the "Fund") seeks long-term growth of capital and
income by investing primarily in U.S. and foreign companies with large and
medium capitalizations that possess hidden opportunities underpriced by the
market. The Fund utilizes a two tier structure, commonly known as a
"master-feeder" and invests all of its assets in the HSBC Investor Value
Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio
employs NWQ Investment Management Company, LLC ("NWQ") as sub-adviser.
INVESTMENT CONCERNS
Value-based investments are subject to the risk that the broad market may not
recognize their intrinsic value.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this fund will fluctuate as the
value of the securities in the Portfolio changes.
MARKET COMMENTARY
The Fund returned 21.70% (without sales charge) for the Class A Shares and
21.90% for the Class I Shares for the 12-month period ended October 31, 2006.
That compared to a 21.46% return for the Russell 1000(R) Value Index(1) and a
17.77% return for the Lipper Multi-Cap Value Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Value stocks rallied during the period as a whole, despite a stock-market
correction in the spring. That environment helped the Fund and its benchmark
generate strong returns.*
The Fund's sub-advisor held a significantly overweight position in stocks in the
oil and natural gas exploration and production (E&P) industry. That stake had a
substantial positive effect on returns against the benchmark, in part because
the Fund's largest holding, an E&P firm, was acquired in an all-cash deal at a
substantial premium to its market value. The Fund's relative returns also
benefited from greater-than-benchmark weightings in defense, telephone, cable
television and radio stocks.*
The sub-advisor found a number of attractively valued stocks in the information
technology sector, which appeared poised to benefit from a rebound in capital
spending. The Fund held an overweight position in technology as a result.
Technology stocks in general generated strong performance, but poor earnings
weighed on the returns of several technology stocks in the Fund's portfolio.
Those company-specific issues caused the Fund's technology position to weaken
the Fund's returns versus its benchmark.*
The Fund held a smaller position than the benchmark in financials stocks,
because the sub-advisor expected a flat yield curve to hurt profit margins at
financial companies. The financials sector generated strong gains, however, led
by a rally in shares of large brokerage firms. The Fund's underweight stake
therefore weighed on relative returns.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
21 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND - AS OF OCTOBER 31, 2006
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Russell 1000(R) Value Index HSBC Investor Value Fund Class A(1)
5/10/04 10000 10000
10341 10774
10500 10819
12/31/04 11590 11697
11600 11519
11794 11894
12253 12660
12/31/05 12408 13026
13144 13617
13221 13856
14044 14530
10/31/06 14504 15016
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
Russell 1000(R) Value Index HSBC Investor Value Fund Class I
5/10/04 10000 9501
10341 10226
10500 10262
12/31/04 11590 11088
11600 10911
11794 11261
12253 11985
12/31/05 12408 12322
13144 12871
13221 13089
14044 13716
10/31/06 14504 14174
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%)
- --------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2006 DATE YEAR INCEPTION
- --------------------------------------------------------------------------------
HSBC Investor Value Fund Class A(1) 5/10/04 15.59 15.12
- --------------------------------------------------------------------------------
HSBC Investor Value Fund Class B(2) 5/10/04 16.78 16.02
- --------------------------------------------------------------------------------
HSBC Investor Value Fund Class C(3) 5/10/04 19.72 16.64
- --------------------------------------------------------------------------------
HSBC Investor Value Fund Class I 5/10/04 21.90 17.84
- --------------------------------------------------------------------------------
Russell 1000(R) Value Index(4) -- 21.46 N/A
- --------------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average(4) -- 17.77 N/A
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
The Fund is measured against the Russell 1000(R) Value Index, an unmanaged index
comprised of the 1000 securities found in the Russell universe with a
less-than-average growth orientation. Companies in this index generally have low
price-to-book and price-to-earning ratios, higher dividend yields, and lower
forecasted growth values. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 22
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
OCTOBER 31, 2006
(UNAUDITED)
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Mortgage Backed Securities 23.3%
- --------------------------------------------------------------------------------
Corporate Bonds 21.5%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 16.1%
- --------------------------------------------------------------------------------
Asset Backed Securities 12.2%
- --------------------------------------------------------------------------------
Commercial Mortgage
Backed Securities 9.3%
- --------------------------------------------------------------------------------
Foreign Bonds 7.8%
- --------------------------------------------------------------------------------
Collateralized Mortgage 7.4%
- --------------------------------------------------------------------------------
Cash Equivalents 2.4%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Corporate Bonds 97.8%
- --------------------------------------------------------------------------------
Cash Equivalents 2.2%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION
FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Corporate Bonds 23.7%
- --------------------------------------------------------------------------------
Mortgage Backed Securities 23.6%
- --------------------------------------------------------------------------------
Asset Backed Securities 15.1%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 8.5%
- --------------------------------------------------------------------------------
Commercial Mortgage
Backed Securities 9.8%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 9.2%
- --------------------------------------------------------------------------------
Foreign Bonds 7.2%
- --------------------------------------------------------------------------------
Cash Equivalents 2.9%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Municipal Bonds 94.8%
- --------------------------------------------------------------------------------
Variable Rate Notes 3.3%
- --------------------------------------------------------------------------------
Cash Equivalents 1.9%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Information Technology 27.3%
- --------------------------------------------------------------------------------
Health Care 19.4%
- --------------------------------------------------------------------------------
Industrials 14.4%
- --------------------------------------------------------------------------------
Financials 11.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 10.3%
- --------------------------------------------------------------------------------
Consumer Staples 8.2%
- --------------------------------------------------------------------------------
Energy 5.8%
- --------------------------------------------------------------------------------
Cash Equivalents 3.5%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Consumer Discretionary 21.9%
- --------------------------------------------------------------------------------
Information Technology 18.0%
- --------------------------------------------------------------------------------
Industrials 16.8%
- --------------------------------------------------------------------------------
Financials 14.5%
- --------------------------------------------------------------------------------
Energy 7.3%
- --------------------------------------------------------------------------------
Materials 6.4%
- --------------------------------------------------------------------------------
Transportation 5.2%
- --------------------------------------------------------------------------------
Consumer Staples 5.1%
- --------------------------------------------------------------------------------
Health Care 4.7%
- --------------------------------------------------------------------------------
Cash Equivalents 0.1%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Europe 61.4%
- --------------------------------------------------------------------------------
Japan 23.9%
- --------------------------------------------------------------------------------
Australia & Far East 6.4%
- --------------------------------------------------------------------------------
Canada 3.6%
- --------------------------------------------------------------------------------
Cash Equivalents 2.4%
- --------------------------------------------------------------------------------
Other 2.3%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
* Portfolio composition is subject to change.
23 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
OCTOBER 31, 2006
(UNAUDITED)
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Industrials 18.7%
- --------------------------------------------------------------------------------
Financials 16.2%
- --------------------------------------------------------------------------------
Information Technology 15.7%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.2%
- --------------------------------------------------------------------------------
Health Care 11.0%
- --------------------------------------------------------------------------------
Energy 8.8%
- --------------------------------------------------------------------------------
Utilities 6.4%
- --------------------------------------------------------------------------------
Materials 5.0%
- --------------------------------------------------------------------------------
Consumer Staples 3.0%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
HealthCare 29.3%
- --------------------------------------------------------------------------------
Information Technology 25.7%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.6%
- --------------------------------------------------------------------------------
Industrials 10.8%
- --------------------------------------------------------------------------------
Energy 8.9%
- --------------------------------------------------------------------------------
Financial 5.5%
- --------------------------------------------------------------------------------
Cash Equivalents 5.4%
- --------------------------------------------------------------------------------
Materials 1.8%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Financials 28.3%
- --------------------------------------------------------------------------------
Consumer Discretionary 11.3%
- --------------------------------------------------------------------------------
Industrials 9.3%
- -------------------------------------------------------------------------------
Consumer Staples 7.7%
- -------------------------------------------------------------------------------
Information Technology 7.7%
- -------------------------------------------------------------------------------
Materials 7.5%
- -------------------------------------------------------------------------------
Energy 7.4%
- -------------------------------------------------------------------------------
Telecommunication Services 7.4%
- -------------------------------------------------------------------------------
Cash Equivalents 6.7%
- -------------------------------------------------------------------------------
Utilities 2.0%
- -------------------------------------------------------------------------------
Miscellaneous 1.9%
- -------------------------------------------------------------------------------
Transportation 1.8%
- -------------------------------------------------------------------------------
Health Care 1.0%
- -------------------------------------------------------------------------------
Total 100.0%
================================================================================
* Portfolio composition is subject to change.
HSBC INVESTOR FAMILY OF FUNDS 24
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25 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--93.4%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
NEW YORK - 84.2%
Buffalo, New York Fiscal Stability Authority
(MBIA Insured), 5.25%, 8/15/13 ................. 500,000 548,575
Corning City, New York School District GO
(FSA Insured), 4.00%, 6/15/08 ................... 930,000 937,245
Corning City, New York School District GO
(FSA Insured), 5.00%, 6/15/09 ................... 790,000 819,451
Metropolitan Transportation Authority of
New York Revenue, 5.25%, 11/15/11 ............... 1,000,000 1,072,540
Metropolitan Transportation Authority of
New York Revenue (FGIC Insured),
5.25%, 7/1/17, Prerefunded 7/1/08 @ 100.5 ....... 1,145,000 1,182,705
Metropolitan Transportation Authority of
New York Revenue (FGIC Insured),
5.50%, 11/15/19 ................................. 1,000,000 1,164,530
Metropolitan Transportation Authority of
New York Revenue (FSA Insured),
5.00%, 11/15/32, Callable 11/15/12 @ 100 ........ 1,625,000 1,698,092
Metropolitan Transportation Authority of
New York Revenue (MBIA Insured),
5.50%, 1/1/19, Callable 7/1/12 @ 100 ............ 480,000 525,835
Metropolitan Transportation Authority of
New York Revenue, Escrowed to
Maturity, 5.75%, 7/1/13 ......................... 285,000 307,962
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA
Insured), 5.625%, 1/1/10 ........................ 1,240,000 1,307,605
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA
Insured), 5.75%, 1/1/14 ......................... 750,000 832,020
New York City GO, 5.00%, 8/1/08 .................... 990,000 1,013,552
New York City GO, 5.00%, 8/1/14 .................... 200,000 216,108
New York City GO, 6.00%, 8/1/14, Callable
8/1/07 @ 101 .................................... 55,000 56,421
New York City GO, 5.00%, 8/1/15 .................... 325,000 352,196
New York City GO (LOC UBS Financial
Services), 5.00%, 12/1/13 ....................... 1,000,000 1,076,580
New York City Housing Development Corp.
Revenue, AMT, 5.60%, 11/1/19, Callable
11/1/09 @ 101 ................................... 100,000 103,782
New York City Industrial Development
Agency (FSA Insured), 5.00%, 11/15/19,
Callable 5/1/13 @ 100 ........................... 1,000,000 1,070,080
New York City Industrial Development
Agency, AMT, 5.00%, 1/1/09 ...................... 1,000,000 1,023,010
New York City Municipal Water Finance
Authority, 5.00%, 6/15/34, Callable
6/15/13 @ 100 ................................... 1,250,000 1,306,500
New York City Municipal Water Finance
Authority, 5.00%, 6/15/36, Callable
12/15/14 @ 100 .................................. 1,000,000 1,051,720
New York City Transitional Finance
Authority Revenue, 5.25%, 5/1/17,
Callable 5/1/11 @ 100 ........................... 400,000 426,680
New York City Transitional Finance
Authority Revenue, 5.25%, 2/1/29,
Callable 2/1/11 @ 100 ........................... 1,540,000 1,637,852
New York State Dormitory Authority
Revenue, Cooper Union (MBIA Insured),
6.00%, 7/1/19, Callable 7/1/09 @ 101 ............ 350,000 374,892
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
New York State Dormitory Authority
Revenue, Department of Health, 5.25%,
7/1/16, Callable 7/1/14 @ 100 ................... 500,000 544,850
New York State Dormitory Authority
Revenue, Master Boces PG (FSA
Insured), 5.25%, 8/15/19, Callable 8/15/12
@ 100 ........................................... 1,000,000 1,081,670
New York State Dormitory Authority
Revenue, Mental Health, 6.50%, 8/15/11 .......... 225,000 252,086
New York State Dormitory Authority
Revenue, Mental Health, 5.50%, 8/15/17,
Prerefunded 2/15/07 @ 102 ....................... 15,000 15,381
New York State Dormitory Authority
Revenue, Mental Health, 5.50%, 8/15/17,
Partially Prerefunded 2/15/07 @ 102 ............. 985,000 1,009,093
New York State Dormitory Authority
Revenue, Mental Health (FGIC Insured),
5.00%, 2/15/15 .................................. 1,245,000 1,359,379
New York State Dormitory Authority
Revenue, New York Presbyterian Hospital
(AMBAC Insured), 5.50%, 8/1/10 .................. 750,000 797,580
New York State Dormitory Authority
Revenue, New York University (AMBAC
Insured), 5.50%, 7/1/18 ......................... 500,000 576,925
New York State Dormitory Authority
Revenue, NYSARC (FSA Insured),
5.25%, 7/1/18, Callable 7/1/12 @ 101 ............ 1,460,000 1,588,860
New York State Dormitory Authority
Revenue, Rockefeller University, 5.25%,
7/1/13, Callable 7/1/08 @ 101 ................... 500,000 517,915
New York State Dormitory Authority
Revenue, School District Board Financing,
5.00%, 7/1/08 ................................... 595,000 608,816
New York State Dormitory Authority
Revenue, Sloan Kettering Institute (MBIA
Insured), 5.50%, 7/1/23 ......................... 1,300,000 1,519,856
New York State Dormitory Authority,
Personal Income Tax Revenue, 5.00%,
3/15/23, Callable 3/15/15 @ 100 ................. 1,000,000 1,068,300
New York State Environmental Facscorp.,
5.70%, 1/15/14, Prerefunded 7/15/09
@ 101 ........................................... 15,000 15,997
New York State Environmental Facscorp.,
5.70%, 1/15/14, Callable 7/15/09 @ 101 ......... 415,000 440,510
New York State Environmental Facscorp.,
5.70%, 1/15/14, Prerefunded 7/15/09
@ 101 ........................................... 570,000 607,871
New York State Mortgage Agency Revenue,
AMT, 5.60%, 10/1/14, Callable 9/1/07
@ 101.5 ......................................... 1,000,000 1,023,890
New York State Municipal Bond Bank
Revenue, 5.50%, 12/1/12 ......................... 850,000 933,214
New York State Thruway Authority
Revenue, Highway & Bridge (FGIC
Insured), 5.50%, 4/1/17, Callable 4/1/11
@ 101 ........................................... 1,000,000 1,090,590
New York State Thruway Authority
Revenue, Highway & Bridge (MBIA
Insured), 5.00%, 4/1/22, Callable 4/1/14
@ 100 ........................................... 1,000,000 1,063,600
New York State Thruway Authority,
Personal Income Tax Revenue, 5.50%,
3/15/20, Prerefunded 3/15/12 @ 100 .............. 500,000 547,645
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 26
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
New York State Thruway Authority,
Personal Income Tax Revenue (FSA
Insured), 5.00%, 3/15/13 ........................ 645,000 695,452
New York State Thruway Authority,
Personal Income Tax Revenue (MBIA
Insured), 5.00%, 3/15/19, Callable 3/15/13
@ 100 ........................................... 1,400,000 1,497,496
New York State Thruway Authority,
Personal Income Tax Revenue (MBIA
Insured), 5.00%, 3/15/21, Callable 3/15/13
@ 100 ........................................... 500,000 534,820
New York State Thruway Authority, Second
General Highway & Bridge (AMBAC
Insured), 5.00%, 4/1/16 ......................... 1,000,000 1,098,790
New York State Thruway Authority, Service
Contract Revenue, 5.50%, 4/1/11 ................. 1,000,000 1,076,910
New York State Urban Development Corp.
Revenue, 5.75%, 4/1/12 .......................... 500,000 549,360
New York State Urban Development Corp.
Revenue, 5.125%, 1/1/22, Callable 7/1/14
@ 100 ........................................... 885,000 943,507
New York State Urban Development Corp.
Revenue, 5.125%, 1/1/25, Prerefunded
1/1/11 @ 100 .................................... 175,000 185,929
New York State Urban Development Corp.
Revenue, Series A (MBIA Insured),
6.50%, 1/1/09 ................................... 500,000 530,575
New York State Urban Development Corp.
Revenue, Series B (FSA Insured), 5.00%,
3/15/21, Callable 3/15/15 @100 .................. 1,000,000 1,073,450
Onondaga County, New York Water
Authority Revenue (FSA Insured), 5.00%,
9/15/14, Callable 9/15/10 @ 101 ................. 300,000 317,544
Onondaga County, New York Water
Authority Revenue (FSA Insured), 5.00%,
9/15/15, Callable 9/15/10 @ 101 ................. 665,000 702,160
Port Authority of New York & New Jersey
Revenue, 5.00%, 9/1/27, Callable 9/1/13
@ 101 ........................................... 795,000 840,808
Port Authority of New York & New Jersey
Revenue, 5.375%, 3/1/28 ......................... 1,100,000 1,280,884
Port Authority of New York & New Jersey
Special Obligation Revenue, AMT (MBIA
Insured), 5.75%, 12/1/22, Callable 12/1/07
@ 102 ........................................... 500,000 520,435
Suffolk County, New York (FSA Insured),
5.25%, 5/1/12 ................................... 515,000 560,083
Suffolk County, New York (FSA Insured),
5.25%, 5/1/15 ................................... 100,000 111,781
Tobacco Settlement Corp., 5.50%, 6/1/21,
Callable 6/1/13 @ 100 ........................... 1,000,000 1,093,290
Webster, New York Central School District
GO (FSA Insured), 5.00%, 6/15/14 ................ 500,000 544,230
Yonkers New York, Series E (MBIA
Insured), 5.00%, 12/1/14 ........................ 750,000 813,848
-----------
51,741,313
-----------
PUERTO RICO - 9.2%
Puerto Rico Commonwealth, Highway and
Transportation (MBIA Insured), 5.00%,
9/15/17, Callable 3/15/14 @ 100 ................. 1,000,000 1,080,220
Puerto Rico Electric Power Authority
Revenue (MBIA Insured), 5.25%, 7/1/22 ........... 1,000,000 1,146,940
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
Puerto Rico Municipal Finance Agency,
5.00%, 8/1/12 ................................... 995,000 1,052,302
Puerto Rico Public Buildings Authority
Revenue, 5.25%, 7/1/33, Callable 7/1/14
@ 100 ........................................... 700,000 748,657
Puerto Rico Public Finance Corp. Revenue
(MBIA Insured), 5.25%, 8/1/29, Callable
2/1/12 @ 100 .................................... 1,000,000 1,074,270
Puerto Rico Publishing Finance Corp.
Revenue (AMBAC Insured), 5.375%,
6/1/18 .......................................... 500,000 570,700
-----------
5,673,089
-----------
TOTAL MUNICIPAL BONDS
(COST $54,927,573) .............................. 57,414,402
-----------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* - 3.3%
- --------------------------------------------------------------------------------
NEW YORK - 3.3%
New York City Housing Development Corp.
Revenue, AMT (LOC Bank of America
N.A.), 3.57%, 11/1/38 ........................... 1,000,000 1,000,000
New York State Housing Finance Agency,
AMT (LOC FNMA), 3.56%, 5/15/33 .................. 1,000,000 1,000,000
-----------
2,000,000
-----------
TOTAL VARIABLE RATE DEMAND
NOTES* (COST $2,000,000) ........................ 2,000,000
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 1.9%
- --------------------------------------------------------------------------------
BlackRock Liquidity New York Money
Fund Portfolio Institutional Shares,
3.37%(a) ........................................ 1,157,865 1,157,865
-----------
TOTAL INVESTMENT COMPANIES
(COST $1,157,865) ............................... 1,157,865
-----------
TOTAL INVESTMENTS
(COST $58,085,438) - 98.6% ...................... 60,572,267
===========
- ----------
Percentages indicated are based on net assets of $61,453,319.
* Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rate presented represents the rate in effect on October 31, 2006. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(a) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
AMBAC--American Municipal Bond Assurance Corporation
AMT --Interest on security is subject to Federal Alternative Minimum Tax
FGIC --Federal Guaranty Insurance Corporation
FNMA --Federal National Mortgage Association
FSA --Financial Security Assurance
GO --General Obligation
LOC --Letter of Credit
MBIA --Municipal Bond Insurance Association
27 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.6%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AEROSPACE & DEFENSE - 2.5%
United Technologies Corp. .......................... 18,100 1,189,532
-----------
AUTOMOTIVE & TRANSPORT - 5.2%
BorgWarner, Inc. ................................... 10,650 612,375
FedEx Corp. ........................................ 7,500 859,050
PACCAR, Inc. ....................................... 16,000 947,360
-----------
2,418,785
-----------
CHEMICALS - 4.1%
Ecolab, Inc. ....................................... 25,000 1,133,750
Monsanto Co. ....................................... 17,600 778,272
-----------
1,912,022
-----------
COMPUTER SOFTWARE - 6.8%
Electronic Arts, Inc. (a) .......................... 22,000 1,163,580
Microsoft Corp. .................................... 50,000 1,435,500
SanDisk Corp. (a) .................................. 12,000 577,200
-----------
3,176,280
-----------
COMPUTERS - 4.3%
Apple Computer, Inc. (a) ........................... 25,000 2,027,000
-----------
CONSUMER PRODUCTS - 4.9%
Nike, Inc., Class B ................................ 9,950 914,206
PepsiCo, Inc. ...................................... 22,000 1,395,680
-----------
2,309,886
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 17.5%
Caterpillar, Inc. .................................. 25,000 1,517,749
Donaldson Co., Inc. ................................ 20,500 769,775
Fastenal Co. ....................................... 12,500 503,000
Graco, Inc. ........................................ 15,000 611,400
Jacobs Engineering Group, Inc. (a) ................. 19,650 1,484,361
Kennametal, Inc. ................................... 18,000 1,110,780
Plum Creek Timber Co., Inc. ........................ 30,000 1,078,200
W. W. Grainger, Inc. ............................... 15,000 1,091,700
-----------
8,166,965
-----------
FINANCIAL SERVICES - 12.1%
American Express Co. ............................... 31,000 1,792,110
Ameriprise Financial, Inc. ......................... 20,000 1,030,000
Blackrock, Inc., Class A ........................... 4,500 678,780
J.P. Morgan Chase & Co. ............................ 17,500 830,200
The Chicago Mercantile Exchange
Holdings, Inc. .................................. 2,700 1,352,700
-----------
5,683,790
-----------
HEALTH CARE - 2.7%
WellPoint, Inc. (a) ................................ 7,000 534,240
Zimmer Holdings, Inc. (a) .......................... 10,000 720,100
-----------
1,254,340
-----------
HOTELS & LODGING - 4.8%
Hilton Hotels Corp. ................................ 41,500 1,200,180
Las Vegas Sands Corp. (a) .......................... 14,000 1,066,800
-----------
2,266,980
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
INTERNET RELATED - 2.3%
Google, Inc., Class A (a) .......................... 2,250 1,071,878
-----------
LEISURE - 1.0%
Carnival Corp. ..................................... 10,000 488,200
-----------
MEDIA - 5.7%
McGraw-Hill Cos., Inc. ............................. 27,000 1,732,590
The Walt Disney Co. ................................ 30,240 951,350
-----------
2,683,940
-----------
MOTOR VEHICLES - 2.3%
Harley-Davidson, Inc. .............................. 15,400 1,056,902
-----------
OIL & GAS - 7.2%
Anadarko Petroleum Corp. ........................... 10,300 478,126
Apache Corp. ....................................... 10,000 653,200
Schlumberger Ltd. .................................. 19,600 1,236,368
Suncor Energy, Inc. ADR ............................ 13,450 1,030,943
-----------
3,398,637
-----------
PHARMACEUTICALS - 2.1%
Amgen, Inc. (a) .................................... 13,000 986,830
-----------
RESTAURANTS - 2.1%
Starbucks Corp. (a) ................................ 26,000 981,500
-----------
RETAIL - 6.1%
Nordstrom, Inc. .................................... 18,500 875,975
Walgreen Co. ....................................... 23,000 1,004,640
Whole Foods Market, Inc. ........................... 15,000 957,600
-----------
2,838,215
-----------
TELECOMMUNICATIONS - 4.5%
QUALCOMM, Inc. ..................................... 33,000 1,200,870
Verizon Communications, Inc. ....................... 25,000 925,000
-----------
2,125,870
-----------
TRANSPORTATION - 1.4%
Expeditors International of Washington, Inc. ....... 14,100 668,481
-----------
TOTAL COMMON STOCKS
(COST $36,828,066) .............................. 46,706,033
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 0.1%
- --------------------------------------------------------------------------------
HSBC Investor Money Market Fund Class I
Shares, 5.23% (b) * ............................. 28,459 28,459
-----------
TOTAL INVESTMENT COMPANIES
(COST $28,459) .................................. 28,459
-----------
TOTAL INVESTMENTS
(COST $36,856,525) - 99.7% ...................... 46,734,492
===========
- ----------
Percentages indicated are based on net assets of $46,890,964.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
ADR--American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 28
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AEROSPACE & DEFENSE - 2.4%
L-3 Communications Holdings, Inc. .................. 8,400 676,368
-----------
AGRICULTURAL CHEMICALS - 0.7%
Syngenta AG ADR .................................... 6,100 196,603
-----------
BANKING - 2.5%
Compass Bancshares, Inc. ........................... 6,000 337,560
HDFC Bank Ltd. ADR ................................. 5,100 353,226
-----------
690,786
-----------
BIOTECHNOLOGY - 0.5%
Vertex Pharmaceuticals, Inc. (a) ................... 3,550 144,130
-----------
CHEMICALS - 2.4%
Airgas, Inc. ....................................... 9,200 347,852
Praxair, Inc. ...................................... 5,225 314,806
-----------
662,658
-----------
COMMERCIAL SERVICES - 1.0%
Sotheby's Holdings, Inc. ........................... 7,500 285,000
-----------
COMMUNICATIONS - 1.4%
CommScope, Inc. (a) ................................ 12,300 392,493
-----------
COMPUTER EQUIPMENT - 1.2%
Logitech International S.A. (a) .................... 13,050 345,173
-----------
COMPUTER SERVICES - 5.5%
aQuantive, Inc. (a) ................................ 13,400 364,212
Cognizant Technology Solutions Corp. (a) ........... 7,350 553,308
Euronet Worldwide, Inc. (a) ........................ 7,575 225,129
Wright Express Corp. (a) ........................... 14,250 390,023
-----------
1,532,672
-----------
COMPUTER SOFTWARE - 4.5%
Akamai Technologies, Inc. (a) ...................... 6,400 299,904
Blackbaud, Inc. .................................... 17,150 428,750
NAVTEQ Corp. (a) ................................... 4,850 161,020
SRA International, Inc., Class A (a) ............... 10,775 345,339
-----------
1,235,013
-----------
CONSTRUCTION & ENGINEERING - 1.8%
McDermott International, Inc. (a) .................. 11,275 503,993
-----------
CONSUMER PRODUCTS -3.8%
Constellation Brands, Inc. (a) ..................... 15,375 422,658
Jarden Corp. (a) ................................... 8,600 309,428
Thor Industries, Inc. .............................. 7,375 323,173
-----------
1,055,259
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 3.4%
Emcor Group, Inc. (a) .............................. 10,975 649,171
Graco, Inc. ........................................ 6,950 283,282
-----------
932,453
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.8%
FormFactor, Inc. (a) ............................... 7,300 278,714
Microchip Technology, Inc. ......................... 8,275 272,496
Veeco Instruments, Inc. (a) ........................ 11,725 219,140
-----------
770,350
-----------
ENVIRONMENTAL SERVICES - 2.0%
Stericycle, Inc. (a) ............................... 7,900 558,609
-----------
FINANCIAL SERVICES - 7.2%
Affiliated Managers Group, Inc. (a) ................ 5,000 500,700
Blackrock, Inc., Class A ........................... 2,025 305,451
Global Signal, Inc. ................................ 8,800 477,840
TD Ameritrade Holding Corp. (a) .................... 18,325 301,813
The Chicago Mercantile Exchange Holdings,
Inc. ............................................ 800 400,800
-----------
1,986,604
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
FOOD & BEVERAGE - 1.4%
Flowers Foods, Inc. ................................ 13,950 379,022
-----------
HEALTH CARE - 10.3%
Coventry Health Care, Inc. (a) ..................... 5,775 271,136
CYTYC Corp. (a) .................................... 9,425 249,009
DaVita, Inc. (a) ................................... 4,700 261,461
Hologic, Inc. (a) .................................. 8,325 400,849
Laboratory Corp. of America Holdings (a) ........... 4,825 330,464
Psychiatric Solutions, Inc. (a) .................... 8,200 272,240
ResMed, Inc. (a) ................................... 11,500 505,884
Techne Corp. (a) ................................... 1,275 71,247
VCA Antech, Inc. (a) ............................... 15,000 485,550
-----------
2,847,840
-----------
INDUSTRIAL MANUFACTURING - 1.5%
Ceradyne, Inc. (a) ................................. 2,575 106,219
Mobile Mini, Inc. (a) .............................. 9,300 299,181
-----------
405,400
-----------
INSURANCE - 1.4%
Proassurance Corp. (a) ............................. 7,300 355,510
StanCorp Financial Group, Inc. ..................... 900 41,121
-----------
396,631
-----------
LEISURE - 1.9%
Penn National Gaming, Inc. (a) ..................... 14,400 526,608
-----------
LIFE SCIENCES TOOLS AND SERVICES - 0.2%
Nektar Therapeutics (a) ............................ 3,625 52,309
-----------
MACHINERY - 1.8%
Oshkosh Truck Corp. ................................ 10,825 489,398
-----------
METALS & MINING - 1.8%
Phelps Dodge Corp. ................................. 5,100 511,938
-----------
MORTGAGE - 2.6%
American Home Mortgage Investment
Corp. ........................................... 9,875 337,429
The PMI Group, Inc. ................................ 9,225 393,446
-----------
730,875
-----------
OIL & GAS - 8.8%
Chesapeake Energy Corp. ............................ 11,325 367,383
Helmerich & Payne, Inc. ............................ 7,550 180,823
National-Oilwell, Inc. (a) ......................... 7,550 456,019
Noble Corp. ........................................ 2,675 187,518
Oil States International, Inc. (a) ................. 5,775 167,706
Precision Drilling Trust ........................... 9,900 283,734
Superior Energy Services, Inc. (a) ................. 4,050 126,765
Weatherford International Ltd. (a) ................. 5,134 210,905
XTO Energy, Inc. ................................... 9,808 457,640
-----------
2,438,493
-----------
REAL ESTATE - 1.0%
Jones Lang LaSalle, Inc. ........................... 3,000 276,000
-----------
RESIDENTIAL BUILDING CONSTRUCTION - 2.0%
KB Home, Inc. ...................................... 5,475 246,047
Pulte Homes, Inc. .................................. 9,625 298,278
-----------
544,325
-----------
RETAIL - 5.7%
Dick's Sporting Goods, Inc. (a) .................... 9,325 464,012
GameStop Corp., Class A (a) ........................ 10,275 524,642
Jos. A. Bank Clothiers, Inc. (a) ................... 9,587 284,638
Tractor Supply Co. (a) ............................. 6,400 309,888
-----------
1,583,180
-----------
29 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
SPECIALTY RETAIL - 2.2%
Tiffany & Co. ...................................... 8,075 288,439
United Auto Group, Inc. ............................ 14,450 332,061
-----------
620,500
-----------
TELECOMMUNICATIONS - 2.4%
j2 Global Communications, Inc. (a) ................. 16,175 443,842
NII Holdings, Inc. Class B (a) ..................... 3,575 232,482
-----------
676,324
-----------
TRANSPORTATION - 3.5%
American Commercial Lines, Inc. (a) ................ 7,200 461,880
Old Dominion Freight Line, Inc. (a) ................ 18,437 509,967
-----------
971,847
-----------
UTILITIES - 6.4%
Entergy Corp. ...................................... 2,850 244,616
Equitable Resources, Inc. .......................... 13,425 543,980
ITC Holdings Corp. ................................. 9,500 337,440
New Jersey Resources Corp. ......................... 6,500 337,090
Northeast Utilities ................................ 12,050 301,371
-----------
1,764,497
-----------
TOTAL COMMON STOCKS
(COST $21,413,420) .............................. 27,183,351
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 1.4%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
MidCap S&P Depositary Receipt Trust
Series 1 ........................................ 2,700 386,937
-----------
TOTAL INVESTMENT COMPANIES
(COST $365,097) ................................. 386,937
-----------
TOTAL INVESTMENTS
(COST $21,778,517) - 99.4% ...................... 27,570,288
===========
- ----------
Percentages indicated are based on net assets of $27,733,752.
(a) Represents non-income producing security.
ADR--American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 30
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--OCTOBER 31, 2006
INTERMEDIATE
CORE PLUS CORE PLUS HIGH YIELD DURATION NEW YORK
FIXED INCOME FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
FUND (ADVISOR) FUND FUND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 81,041,088 $ 16,773,643 $ 9,673,038 $ 18,252,279 $ --
Investments, at value (non-affiliated) -- -- -- -- 60,572,267
Cash -- -- -- -- 165,465
Interest and dividends receivable -- -- -- -- 798,031
Receivable for capital shares issued 979 14,469 2,500 550 106,942
Receivable from Investment Adviser -- -- -- -- --
Receivable from Sub-Administrator 78,120 21,147 62,551 51,318 --
Prepaid expenses and other assets 6,548 3,958 3,775 2,187 7,134
-------------- ------------ ------------ ------------ ------------
TOTAL ASSETS 81,126,735 16,813,217 9,741,864 18,306,334 61,649,839
-------------- ------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable 117,929 4,329 6,818 16,851 54,452
Payable for capital shares redeemed 4,813 39,684 68,019 57,828 87,283
Accrued expenses and other liabilities:
Investment management -- -- -- -- 12,888
Administration 4,648 723 315 1,211 5,151
Distribution -- 6,131 1,426 4,363 9,934
Shareholder servicing -- 3,515 1,481 1,121 10,021
Accounting -- -- -- -- 204
Transfer Agent 5,884 4,741 5,355 5,123 6,058
Trustee 122 28 14 32 201
Other 17,184 2,231 1,198 2,537 10,328
-------------- ------------ ------------ ------------ ------------
TOTAL LIABILITIES 150,580 61,382 84,626 89,066 196,520
-------------- ------------ ------------ ------------ ------------
NET ASSETS $ 80,976,155 $ 16,751,835 $ 9,657,238 $ 18,217,268 $ 61,453,319
============== ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 81,845,247 $ 17,608,066 $ 9,549,568 $ 18,848,928 $ 58,950,157
Accumulated net investment income (loss) 29,636 5,120 6,484 7,071 (5,389)
Accumulated net realized gains (losses)
from investments and foreign currency
transactions (1,557,785) (997,648) 31,454 (729,614) 21,722
Unrealized appreciation/depreciation from
investments and foreign currencies 659,057 136,297 69,732 90,883 2,486,829
-------------- ------------ ------------ ------------ ------------
NET ASSETS $ 80,976,155 $ 16,751,835 $ 9,657,238 $ 18,217,268 $ 61,453,319
============== ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ -- $ 12,248,378 $ 4,742,071 $ 976,318 $ 32,726,890
Class B Shares $ -- $ 4,267,300 $ 2,106,101 $ 3,738,101 $ 13,735,224
Class C Shares $ -- $ 236,157 $ 240,745 $ 502,657 $ 1,245,534
Class I Shares $ -- $ -- $ 2,568,321 $ 13,000,192 $ 13,745,671
Advisor Shares $ 80,976,155 $ -- $ -- $ -- $ --
-------------- ------------ ------------ ------------ ------------
$ 80,976,155 $ 16,751,835 $ 9,657,238 $ 18,217,268 $ 61,453,319
============== ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
($0.001 par value; unlimited number of shares
authorized):
Class A Shares -- 1,188,994 467,913 100,492 2,927,514
Class B Shares -- 413,799 207,743 384,072 1,229,925
Class C Shares -- 22,939 23,696 51,671 111,100
Class I Shares -- -- 253,399 1,336,348 1,229,421
Advisor Shares 7,990,577 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE:
Class A Shares $ -- $ 10.30 $ 10.13 $ 9.72 $ 11.18
Class B Shares* $ -- $ 10.31 $ 10.14 $ 9.73 $ 11.17
Class C Shares* $ -- $ 10.30 $ 10.16 $ 9.73 $ 11.21
Class I Shares $ -- $ -- $ 10.14 $ 9.73 $ 11.18
Advisor Shares $ 10.13 $ -- $ -- $ -- $ --
Maximum sales charge--Class A Shares -- 4.75% 4.75% 4.75% 4.75%
============== ============ ============ ============ ============
Maximum Offering Price per share (Net Asset
Value/(100%--maximum sales charge)) $ -- $ 10.82 $ 10.64 $ 10.20 $ 11.74
============== ============ ============ ============ ============
Total Investments, at cost $ 58,085,438
============
- ----------
* Redemption price per share varies by length of time shares are held.
31 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--OCTOBER 31, 2006 (CONTINUED)
GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY
FUND INCOME FUND EQUITY FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 38,824,353 $ -- $ 283,223,082 $ -- $ 29,644,202
Investments, at value (non-affiliated) -- 46,706,033 -- 27,570,288 --
Investment in affiliates, at value -- 28,459 -- -- --
Interest and dividends receivable -- 30,625 -- 5,354 --
Receivable for capital shares issued 9,582 645 304,883 1,877 16,793
Receivable for investments sold -- 500,470 -- 692,262 --
Receivable from Investment Adviser -- 24,552 -- 7,164 --
Receivable from Sub-Administrator 34,731 -- -- 17,780 14,702
Tax reclaim receivable -- -- 282,581 -- --
Prepaid expenses and other assets 5,534 11,874 14,850 3,522 5,186
------------- ------------ ------------- ------------ ------------
TOTAL ASSETS 38,874,200 47,302,658 283,825,396 28,298,247 29,680,883
------------- ------------ ------------- ------------ ------------
LIABILITIES:
Cash overdraft -- -- -- 197,764 --
Payable for investments purchased -- 123,636 -- 309,230 --
Payable for capital shares redeemed 110,785 236,000 3,981 13,801 129,677
Accrued expenses and other liabilities:
Investment management -- 23,990 -- 17,910 --
Administration 1,269 10,370 11,377 4,826 1,182
Distribution 1,103 2,972 -- 4,930 2,408
Shareholder servicing 4,989 1,262 -- 2,267 6,239
Accounting -- 139 -- 42 --
Transfer Agent 8,169 5,973 2,788 7,308 7,549
Printing 3,162 3,810 24,825 2,278 2,377
Trustee 56 134 393 81 42
Other 1,769 3,408 33,427 4,058 1,330
------------- ------------ ------------- ------------ ------------
TOTAL LIABILITIES 131,302 411,694 76,791 564,495 150,804
------------- ------------ ------------- ------------ ------------
NET ASSETS $ 38,742,898 $ 46,890,964 $ 283,748,605 $ 27,733,752 $ 29,530,079
============= ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 31,811,847 $ 47,154,412 $ 191,671,263 $ 20,006,524 $ 21,418,219
Accumulated net investment income (loss) -- -- 4,473,624 -- --
Accumulated net realized gains (losses) from
investments and foreign currency transactions 2,947,973 (10,141,415) 23,884,676 1,935,457 3,547,264
Unrealized appreciation/depreciation from
investments and foreign currencies 3,983,078 9,877,967 63,719,042 5,791,771 4,564,596
------------- ------------ ------------- ------------ ------------
NET ASSETS $ 38,742,898 $ 46,890,964 $ 283,748,605 $ 27,733,752 $ 29,530,079
============= ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ 21,985,130 $ 1,393,800 $ -- $ 3,184,782 $ 24,462,811
Class B Shares $ 1,446,084 $ 4,537,077 $ -- $ 7,424,814 $ 4,768,367
Class C Shares $ 269,832 $ 34,890 $ -- $ 94,714 $ 298,901
Class I Shares $ 15,041,852 $ 40,925,197 $ -- $ -- $ --
Advisor Shares $ -- $ -- $ 283,748,605 $ -- $ --
Trust Shares $ -- $ -- $ -- $ 17,029,442 $ --
------------- ------------ ------------- ------------ ------------
$ 38,742,898 $ 46,890,964 $ 283,748,605 $ 27,733,752 $ 29,530,079
============= ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
($0.001 par value; unlimited number of shares
authorized):
Class A Shares 1,479,163 126,937 -- 358,460 1,711,980
Class B Shares 102,068 422,426 -- 886,580 359,790
Class C Shares 18,942 3,221 -- 11,212 22,342
Class I Shares 1,009,421 3,719,872 -- -- --
Advisor Shares -- -- 12,838,892 -- --
Trust Shares -- -- -- 1,885,709 --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE:
Class A Shares $ 14.86 $ 10.98 $ -- $ 8.88 $ 14.29
Class B Shares* $ 14.17 $ 10.74 $ -- $ 8.37 $ 13.25
Class C Shares* $ 14.24** $ 10.83 $ -- $ 8.45 $ 13.38
Class I Shares $ 14.90 $ 11.00 $ -- $ -- $ --
Advisor Shares $ -- $ -- $ 22.10 $ -- $ --
Trust Shares $ -- $ -- $ -- $ 9.03 $ --
Maximum sales charge--Class A Shares 5.00% 5.00% -- 5.00% 5.00%
============= ============ ============= ============ ============
Maximum Offering Price per share (Net Asset
Value/(100%--maximum sales charge)) $ 15.65 $ 11.56 $ -- $ 9.35 $ 15.04
============= ============ ============= ============ ============
Total Investments, at cost $ 36,856,525 $ 21,778,517
============ ============
- ----------
* Redemption price per share varies by length of time shares are held.
** Due to rounding, net assets divided by shares outstanding does not equal
the NAV.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 32
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--OCTOBER 31, 2006 (CONTINUED)
OVERSEAS SMALL CAP VALUE
EQUITY FUND EQUITY FUND FUND
- --------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 26,236,606 $ 192,129,492 $ 44,929,433
Receivable for capital shares issued 15,837 82,838 9,053
Receivable from Sub Administrator -- -- 32,570
Tax reclaims receivable 54,200 -- --
Prepaid expenses and other assets 4,958 8,566 5,587
------------ ------------- ------------
TOTAL ASSETS 26,311,601 192,220,896 44,976,643
------------ ------------- ------------
LIABILITIES:
Payable for capital shares redeemed 134,912 41,200 135,962
Accrued expenses and other liabilities:
Administration 971 9,149 1,447
Distribution 2,427 -- 1,357
Shareholder servicing 5,451 -- 5,636
Compliance service -- -- 1
Trustee 41 263 66
Transfer agent 5,963 3,819 7,896
Printing 2,153 22,827 3,206
Other 1,194 19,866 2,085
------------ ------------- ------------
TOTAL LIABILITIES 153,112 97,124 157,656
------------ ------------- ------------
NET ASSETS $ 26,158,489 $ 192,123,772 $ 44,818,987
============ ============= ============
- --------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 15,686,277 $ 130,339,368 $ 31,086,077
Accumulated net investment income (loss) 294,103 -- 94,489
Accumulated net realized gains (losses) from
investments and foreign currency transactions 2,915,409 29,236,841 4,492,522
Unrealized appreciation/depreciation from
investments and foreign currencies 7,262,700 32,547,563 9,145,899
------------ ------------- ------------
NET ASSETS $ 26,158,489 $ 192,123,772 $ 44,818,987
============ ============= ============
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ 22,761,061 -- $ 24,687,571
Class B Shares 3,234,056 -- 1,938,662
Class C Shares 163,372 -- 156,818
Class I Shares -- -- 18,035,936
Advisor Shares -- 192,123,772 --
------------ ------------- ------------
$ 26,158,489 $ 192,123,772 $ 44,818,987
============ ============= ============
- --------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
($0.001 par value; unlimited number of shares authorized):
Class A Shares 1,207,322 -- 1,476,764
Class B Shares 179,656 -- 120,587
Class C Shares 8,895 -- 9,692
Class I Shares -- -- 1,079,826
Advisor Shares -- 11,116,806 --
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE:
Class A Shares $ 18.85 $ -- $ 16.72
Class B Shares* $ 18.00 $ -- $ 16.08
Class C Shares* $ 18.37 $ -- $ 16.18
Class I Shares $ -- $ -- $ 16.70
Advisor Shares $ -- $ 17.28 $ --
Maximum sales charge--Class A Shares 5.00% -- 5.00%
============ ============= ============
Maximum Offering Price per share (Net Asset Value/(100%--
maximum sales charge)) $ 19.84 $ -- $ 17.60
============ ============= ============
- ----------
* Redemption price per share varies by length of time shares are held.
33 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2006
CORE PLUS INTERMEDIATE
FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK
FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
(ADVISOR) FUND FUND (a) FUND BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $ -- $ 2,731,640
Dividends -- -- -- -- 45,681
Investment income from Portfolio (b) 4,562,210 1,030,455 644,323 1,162,377 --
Expenses from Portfolio (b) (517,613) (116,995) (146,438) (168,352) --
------------ ------------ ------------ ------------ -----------
TOTAL INVESTMENT INCOME 4,044,597 913,460 497,885 994,025 2,777,321
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment management -- -- -- -- 163,986
Administration 30,499 6,891 2,971 8,130 49,147
Distribution:
Class B Shares -- 39,241 9,615 32,055 113,266
Class C Shares -- 1,884 993 3,823 11,010
Shareholder servicing:
Class A Shares -- 32,266 10,462 2,513 83,204
Class B Shares -- 13,080 3,205 10,685 37,755
Class C Shares -- 628 331 1,274 3,670
Accounting 9,000 27,000 34,300 35,250 74,567
Compliance service 1,171 270 113 322 8,303
Custodian -- -- -- -- 21,995
Registration 6,248 3,346 7,696 2,584 1,491
Printing 31,255 14,359 4,953 21,995 39,337
Transfer agent 40,886 44,437 61,628 57,094 61,630
Trustee 2,285 540 181 654 4,279
Other 11,823 3,877 2,640 5,445 21,185
------------ ------------ ------------ ------------ -----------
Total expenses before fee reductions 133,167 187,819 139,088 181,824 694,825
Fees reduced by Investment Adviser (115,915) (97,063) (154,511) (123,803) --
Expenses waived or reimbursed by
Sub-Administrator (78,120) (21,147) (62,551) (51,318) --
------------ ------------ ------------ ------------ -----------
NET EXPENSES (60,868) 69,609 (77,974) 6,703 694,825
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,105,465 843,851 575,859 987,322 2,082,496
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES: (b)
Net realized gains (losses) from investments and
foreign currency transactions (1,501,702) (377,777) 31,454 (420,155) 21,722
Change in unrealized appreciation/depreciation
from investments and foreign currencies 1,816,915 452,867 69,732 480,307 641,574
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments
and foreign currency transactions 315,213 75,090 101,186 60,152 663,296
------------ ------------ ------------ ------------ -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,420,678 $ 918,941 $ 677,045 $ 1,047,474 $ 2,745,792
============ ============ ============ ============ ===========
- ----------
(a) High Yield Fixed Income Fund commenced operations on November 18, 2005.
(b) With the exception of New York Tax-Free Bond Fund, represents amounts
allocated from the respective Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 34
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2006 (CONTINUED)
GROWTH AND INTERNATIONAL
GROWTH INCOME EQUITY MID-CAP OPPORTUNITY
FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ -- $ 466,125 $ -- $ 417,619 $ --
Dividends from affiliated investments -- 31,842 -- 16,502 --
Foreign tax withholding -- (188) -- -- --
Income from securities lending -- 106 -- 1,800 --
Investment income from Portfolio (a) 411,559 -- 7,772,188 -- 150,865
Tax reclaims -- -- 243,780 -- --
Foreign tax withholding from Portfolio (a) -- -- (825,983) -- --
Expenses from Portfolio (a) (266,940) -- (2,059,473) -- (268,617)
------------ ----------- ------------- ----------- -----------
TOTAL INVESTMENT INCOME (LOSS) 144,619 497,885 5,130,512 435,921 (117,752)
------------ ----------- ------------- ----------- -----------
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment management -- 283,995 -- 213,550 --
Administration 14,472 35,462 89,784 21,333 10,988
Distribution:
Class B Shares 10,548 33,712 -- 57,769 36,314
Class C Shares 2,477 444 -- 878 2,461
Shareholder servicing:
Class A Shares 55,621 3,405 -- 6,215 60,393
Class B Shares 3,516 11,237 -- 19,256 12,105
Class C Shares 826 148 -- 293 820
Accounting 36,000 64,255 9,000 64,054 27,000
Compliance service 553 1,286 3,319 787 416
Custodian -- 18,724 -- 16,025 --
Interest -- 14,008 -- 5,082 --
Legal 2,210 7,100 12,638 3,615 1,660
Printing 31,265 56,666 96,308 30,178 19,622
Transfer agent 94,310 67,687 30,720 85,428 86,904
Trustee 1,038 2,637 6,309 1,499 797
Other 12,056 26,691 27,443 13,402 9,049
------------ ----------- ------------- ----------- -----------
Total expenses before fee reductions 264,892 627,457 275,521 539,364 268,529
Fees reduced by Investment Advisor (57,108) (99,275) -- (80,765) (29,007)
Expenses waived or reimbursed by
Sub-Administrator (34,731) -- -- (17,780) (14,702)
------------ ----------- ------------- ----------- -----------
NET EXPENSES 173,053 528,182 275,521 440,819 224,820
------------ ----------- ------------- ----------- -----------
- ----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (28,434) (30,297) 4,854,991 (4,898) (342,572)
------------ ----------- ------------- ----------- -----------
- ----------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES: (a)
Net realized gains (losses) from investments and
foreign currency transactions (b) 3,103,028 3,592,585 24,717,984 1,957,696 3,994,994
Change in unrealized appreciation/depreciation
from investments and foreign currencies (525,374) 2,346,553 35,300,745 1,800,748 1,342,022
------------ ----------- ------------- ----------- -----------
- ----------------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and
foreign currency transactions 2,577,654 5,939,138 60,018,729 3,758,444 5,337,016
------------ ----------- ------------- ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,549,220 $ 5,908,841 $ 64,873,720 $ 3,753,546 $ 4,994,444
============ =========== ============= =========== ===========
- ----------
(a) With the exception of the Growth and Income Fund and Mid-Cap Fund,
represents amounts allocated from the respective Portfolios.
(b) Growth Fund includes $1,200 related to the reimbursement of losses
realized from the disposal of an investment that violated certain
investment policies and limitations.
35 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2006 (CONTINUED)
OVERSEAS SMALL CAP
EQUITY EQUITY VALUE
FUND FUND FUND
- ---------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Investment income from Portfolio (a) $ 788,547 $ 963,201 $ 819,606
Tax reclaims 21,979 -- --
Foreign tax withholding from Portfolio (a) (83,153) -- (1)
Expenses from Portfolio (a) (214,239) (1,715,706) (298,741)
------------ ------------ ------------
TOTAL INVESTMENT INCOME 513,134 (752,505) 520,864
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
EXPENSES:
Administration 9,341 70,230 15,824
Distribution:
Class B Shares 21,919 -- 13,926
Class C Shares 1,403 -- 2,196
Shareholder servicing:
Class A Shares 54,551 -- 59,773
Class B Shares 7,306 -- 4,642
Class C Shares 468 -- 732
Accounting 27,000 9,000 36,000
Compliance service 354 2,648 601
Legal 1,398 10,834 2,432
Printing 15,872 57,210 38,606
Transfer agent 71,342 30,941 92,699
Trustee 677 5,062 1,139
Other 12,714 21,897 12,553
------------ ------------ ------------
Total expenses before fee reductions 224,345 207,822 281,123
Fees reduced by Investment Advisor -- -- (64,670)
Expenses waived or reimbursed by
Sub-Administrator -- -- (32,570)
------------ ------------ ------------
NET EXPENSES 224,345 207,822 183,883
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 288,789 (960,327) 336,981
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES: (a)
Net realized gains (losses) from investments and
foreign currency transactions 3,038,364 31,062,646 4,265,780
Change in unrealized appreciation/depreciation from
investments and foreign currencies 3,516,165 2,986,040 3,709,021
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
Net realized/unrealized gains from investments and
foreign currency transactions 6,554,529 34,048,686 7,974,801
------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,843,318 $ 33,088,359 $ 8,311,782
============ ============ ============
- ----------
(a) Represents amounts allocated from the respective Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 36
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
CORE PLUS CORE PLUS FIXED
FIXED INCOME FUND (ADVISOR) INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 4,105,465 $ 4,410,508 $ 843,851 $ 917,047
Net realized gains (losses) from
investments and foreign currency
transactions (1,501,702) 5,419,977 (377,777) 357,536
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 1,816,915 (7,924,615) 452,867 (1,010,611)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 4,420,678 1,905,870 918,941 263,972
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (622,411) (736,448)
Class B Shares -- -- (212,869) (217,164)
Class C Shares -- -- (10,246) (12,298)
Advisor Shares (4,104,585) (4,620,609) -- --
NET REALIZED GAINS:
Class A Shares -- -- (73,046) --
Class B Shares -- -- (29,921) --
Class C Shares -- -- (1,351) --
Advisor Shares (3,712,469) -- -- --
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (7,817,054) (4,620,609) (949,844) (965,910)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS (5,370,906) (17,060,133) (7,315,720) 158,293
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS (8,767,282) (19,774,872) (7,346,623) (543,645)
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 89,743,437 109,518,309 24,098,458 24,642,103
------------- ------------- ------------- -------------
End of period $ 80,976,155 $ 89,743,437 $ 16,751,835 $ 24,098,458
============= ============= ============= =============
Accumulated net investment income
(loss) $ 29,636 $ 1,400,871 $ 5,120 $ 108,687
============= ============= ============= =============
37 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
CORE PLUS CORE PLUS FIXED
FIXED INCOME FUND (ADVISOR) INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- --------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 1,922,955 $ 5,377,389
Dividends reinvested -- -- 683,474 686,992
Cost of shares redeemed -- -- (7,996,165) (5,153,657)
------------ ------------ ------------ ------------
Class A Shares capital transactions -- -- (5,389,736) 910,724
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 107,919 276,141
Dividends reinvested -- -- 219,337 182,474
Cost of shares redeemed -- -- (2,205,242) (1,128,034)
------------ ------------ ------------ ------------
Class B Shares capital transactions -- -- (1,877,986) (669,419)
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- 5 41,252
Dividends reinvested -- -- 11,807 12,108
Cost of shares redeemed -- -- (59,810) (136,372)
------------ ------------ ------------ ------------
Class C Shares capital transactions -- -- (47,998) (83,012)
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 18,068,509 19,120,519 -- --
Dividends reinvested 5,415,411 2,839,680 -- --
Cost of shares redeemed (28,854,826) (39,020,332) -- --
------------ ------------ ------------ ------------
Advisor Shares capital transactions (5,370,906) (17,060,133) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (5,370,906) $(17,060,133) $ (7,315,720) $ 158,293
============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 188,221 510,841
Reinvested -- -- 66,942 65,729
Redeemed -- -- (779,053) (491,249)
------------ ------------ ------------ ------------
Change in Class A Shares -- -- (523,890) 85,321
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 10,598 26,263
Reinvested -- -- 21,472 17,068
Redeemed -- -- (216,292) (107,440)
------------ ------------ ------------ ------------
Change in Class B Shares -- -- (184,222) (64,109)
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- -- 3,914
Reinvested -- -- 1,158 1,153
Redeemed -- -- (5,866) (13,005)
------------ ------------ ------------ ------------
Change in Class C Shares -- -- (4,708) (7,938)
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 1,788,443 1,776,405 -- --
Reinvested 536,720 264,105 -- --
Redeemed (2,843,745) (3,627,137) -- --
------------ ------------ ------------ ------------
Change in Advisor Shares (518,582) (1,586,627) -- --
------------ ------------ ------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 38
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
HIGH YIELD FIXED INTERMEDIATE DURATION
INCOME FUND FIXED INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 (a) OCTOBER 31, 2006 OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 575,859 $ 987,322 $ 1,217,650
Net realized gains (losses) from investments and foreign currency
transactions 31,454 (420,155) (164,652)
Change in unrealized appreciation/depreciation from investments
and foreign currencies 69,732 480,307 (909,347)
------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 677,045 1,047,474 143,651
------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (301,928) (46,821) (46,585)
Class B Shares (84,509) (166,109) (167,671)
Class C Shares (8,755) (19,885) (17,702)
Class I Shares (174,183) (767,823) (1,107,840)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAINS:
Class A Shares -- -- (8,294)
Class B Shares -- -- (34,076)
Class C Shares -- -- (3,623)
Class I Shares -- -- (168,256)
------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (569,375) (1,000,638) (1,554,047)
------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 9,549,568 (13,008,376) (7,184,938)
------------ ------------ ------------
CHANGE IN NET ASSETS 9,657,238 (12,961,540) (8,595,334)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period -- 31,178,808 39,774,142
------------ ------------ ------------
End of period $ 9,657,238 $ 18,217,268 $ 31,178,808
============ ============ ============
Accumulated net investment income (loss) $ 6,484 $ 7,071 $ 14,682
============ ============ ============
- ----------
(a) The High Yield Fixed Income Fund commenced operation on November 18, 2005.
39 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
HIGH YIELD FIXED INTERMEDIATE DURATION
INCOME FUND FIXED INCOME FUND
- ---------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 (a) OCTOBER 31, 2006 OCTOBER 31, 2005
- ---------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 5,577,211 $ 25,306 $ 34,242
Dividends reinvested 287,526 43,347 50,200
Cost of shares redeemed (1,183,299) (151,593) (535,335)
------------ ------------ ------------
Class A Shares capital transactions 4,681,438 (82,940) (450,893)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 2,078,468 75,008 321,814
Dividends reinvested 56,791 141,353 167,106
Cost of shares redeemed (45,574) (1,343,632) (1,732,661)
------------ ------------ ------------
Class B Shares capital transactions 2,089,685 (1,127,271) (1,243,741)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 230,344 1,800 73,800
Dividends reinvested 8,113 20,272 20,896
Cost of shares redeemed (110) (49,000) (222,961)
------------ ------------ ------------
Class C Shares capital transactions 238,347 (26,928) (128,265)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 2,775,374 908,462 3,589,138
Dividends reinvested 173,189 613,135 949,314
Cost of shares redeemed (408,465) (13,292,834) (9,900,491)
------------ ------------ ------------
Class I Shares capital transactions 2,540,098 (11,771,237) (5,362,039)
------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 9,549,568 $(13,008,376) $ (7,184,938)
============ ============ ============
- ---------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 557,001 2,635 3,469
Reinvested 28,555 4,508 5,075
Redeemed (117,643) (15,783) (54,165)
------------ ------------ ------------
Change in Class A Shares 467,913 (8,640) (45,621)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 206,587 7,820 32,423
Reinvested 5,627 14,681 16,867
Redeemed (4,471) (139,306) (175,199)
------------ ------------ ------------
Change in Class B Shares 207,743 (116,805) (125,909)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 22,902 187 7,375
Reinvested 804 2,107 2,111
Redeemed (10) (5,095) (22,459)
------------ ------------ ------------
Change in Class C Shares 23,696 (2,801) (12,973)
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 276,989 94,210 362,553
Reinvested 17,198 63,673 95,902
Redeemed (40,788) (1,377,269) (1,000,441)
------------ ------------ ------------
Change in Class I Shares 253,399 (1,219,386) (541,986)
------------ ------------ ------------
- ----------
(a) The High Yield Fixed Income Fund commenced operations on November 18, 2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 40
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
NEW YORK TAX-FREE
BOND FUND
- --------------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
- --------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 2,082,496 $ 2,050,916
Net realized gains (losses) from investment
transactions 21,722 100,731
Change in unrealized appreciation/depreciation from
investments 641,574 (1,531,859)
------------ ------------
CHANGE IN NET ASSETS FROM OPERATIONS 2,745,792 619,788
------------ ------------
- --------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (1,102,509) (1,025,066)
Class B Shares (387,661) (381,218)
Class C Shares (37,439) (46,591)
Class I Shares (560,276) (598,043)
NET REALIZED GAINS:
Class A Shares (50,865) (52,912)
Class B Shares (23,139) (26,947)
Class C Shares (2,487) (3,247)
Class I Shares (24,240) (30,806)
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (2,188,616) (2,164,830)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (8,565,736) (1,586,390)
------------ ------------
CHANGE IN NET ASSETS (8,008,560) (3,131,432)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 69,461,879 72,593,311
------------ ------------
End of period $ 61,453,319 $ 69,461,879
============ ============
Accumulated net investment income (loss) $ (5,389) $ --
============ ============
41 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
NEW YORK TAX-FREE
BOND FUND
- ------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
- ------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 8,315,770 $ 11,178,427
Dividends reinvested 1,100,289 997,193
Cost of shares redeemed (11,409,207) (9,874,970)
------------ ------------
Class A Shares capital transactions (1,993,148) 2,300,650
------------ ------------
- ------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 724,932 1,160,530
Dividends reinvested 316,025 300,525
Cost of shares redeemed (3,683,709) (2,294,196)
------------ ------------
Class B Shares capital transactions (2,642,752) (833,141)
------------ ------------
- ------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 3,537 168,099
Dividends reinvested 24,112 31,499
Cost of shares redeemed (575,373) (712,746)
------------ ------------
Class C Shares capital transactions (547,724) (513,148)
------------ ------------
- ------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 1,615,824 3,878,812
Dividends reinvested 51,571 88,333
Cost of shares redeemed (5,049,507) (6,507,896)
------------ ------------
Class I Shares capital transactions (3,382,112) (2,540,751)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (8,565,736) $ (1,586,390)
============ ============
- ------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 750,787 994,246
Reinvested 99,371 88,791
Redeemed (1,031,733) (879,250)
------------ ------------
Change in Class A Shares (181,575) 203,787
------------ ------------
- ------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 65,596 103,036
Reinvested 28,569 26,746
Redeemed (333,344) (204,345)
------------ ------------
Change in Class B Shares (239,179) (74,563)
------------ ------------
- ------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 318 14,856
Reinvested 2,171 2,794
Redeemed (51,822) (63,317)
------------ ------------
Change in Class C Shares (49,333) (45,667)
------------ ------------
- ------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 145,686 345,617
Reinvested 4,650 7,844
Redeemed (453,581) (579,080)
------------ ------------
Change in Class I Shares (303,245) (225,619)
------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 42
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH FUND GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (28,434) $ 133,116 $ (30,297) $ 1,924,523
Net realized gains (losses) from investment
transactions 3,103,028 1,569,705 3,592,585 42,217,628
Change in unrealized appreciation/depreciation
from investments (525,374) 3,355,369 2,346,553 (22,761,234)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM OPERATIONS 2,549,220 5,058,190 5,908,841 21,380,917
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- (71,973) -- (13,734)
Class B Shares -- -- -- (14,001)
Class C Shares -- -- -- (192)
Class I Shares -- (120,143) (25,548) (2,477,542)
NET REALIZED GAINS:
Class A Shares (357,021) -- -- --
Class B Shares (22,246) -- -- --
Class C Shares (5,635) -- -- --
Class I Shares (219,862) -- -- --
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (604,764) (192,116) (25,548) (2,505,469)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 164,248 (6,429,843) (11,382,983) (168,065,613)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 2,108,704 (1,563,769) (5,499,690) (149,190,165)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 36,634,194 38,197,963 52,390,654 201,580,819
------------- ------------- ------------- -------------
End of period $ 38,742,898 $ 36,634,194 $ 46,890,964 $ 52,390,654
============= ============= ============= =============
Accumulated net investment income (loss) $ -- $ -- $ -- $ --
============= ============= ============= =============
43 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH FUND GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- --------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 4,530,725 $ 7,190,005 $ 112,013 $ 137,722
Dividends reinvested 354,352 71,637 -- 13,438
Cost of shares redeemed (5,905,203) (5,124,260) (135,477) (534,595)
------------- ------------- ------------- -------------
Class A Shares capital transactions (1,020,126) 2,137,382 (23,464) (383,435)
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 233,048 179,753 398,426 527,760
Dividends reinvested 21,697 -- -- 13,755
Cost of shares redeemed (181,902) (421,388) (543,576) (592,341)
------------- ------------- ------------- -------------
Class B Shares capital transactions 72,843 (241,635) (145,150) (50,826)
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 1,004 1,916 19,650 2,599
Dividends reinvested 5,623 -- -- 183
Cost of shares redeemed (94,166) (4,610) (38,887) (20)
------------- ------------- ------------- -------------
Class C Shares capital transactions (87,539) (2,694) (19,237) 2,762
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 4,081,210 3,674,487 4,960,323 8,479,032
Dividends reinvested 213,190 95,917 1,654 622,998
Cost of shares redeemed (3,095,330) (12,093,300) (16,157,109) (131,458,444)
Redemption In-Kind -- -- -- (45,277,700)
------------- ------------- ------------- -------------
Class I Shares capital transactions 1,199,070 (8,322,896) (11,195,132) (167,634,114)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 164,248 $ (6,429,843) $ (11,382,983) $(168,065,613)
============= ============= ============= =============
- --------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 306,676 543,733 10,618 14,916
Reinvested 24,254 5,380 -- 1,443
Redeemed (400,591) (385,043) (12,870) (58,381)
------------- ------------- ------------- -------------
Change in Class A Shares (69,661) 164,070 (2,252) (42,022)
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 16,381 13,881 38,279 57,646
Reinvested 1,549 -- -- 1,492
Redeemed (12,915) (32,632) (52,090) (64,860)
------------- ------------- ------------- -------------
Change in Class B Shares 5,015 (18,751) (13,811) (5,722)
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 70 169 1,938 287
Reinvested 399 -- -- 20
Redeemed (6,716) (357) (3,743) (2)
------------- ------------- ------------- -------------
Change in Class C Shares (6,247) (188) (1,805) 305
------------- ------------- ------------- -------------
- --------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 276,028 278,002 465,603 917,280
Reinvested 14,592 7,226 160 66,974
Redeemed (209,584) (880,050) (1,552,705) (13,877,205)
Redemption In-Kind -- -- -- (4,672,621)
------------- ------------- ------------- -------------
Change in Class I Shares 81,036 (594,822) (1,086,942) (17,565,572)
------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 44
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERNATIONAL EQUITY FUND MID-CAP FUND
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 4,854,991 $ 3,493,764 $ (4,898) $ (258,037)
Net realized gains (losses) from investment and
foreign currency transactions 24,717,984 12,653,084 1,957,696 30,598,634
Change in unrealized appreciation/depreciation from
investments and foreign currencies 35,300,745 14,319,665 1,800,748 (13,661,163)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 64,873,720 30,466,513 3,753,546 16,679,434
------------- ------------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Advisor Shares (4,030,977) (2,396,450) -- --
NET REALIZED GAINS:
Class A Shares -- -- (464,228) --
Class B Shares -- -- (1,688,238) --
Class C Shares -- -- (25,282) --
Advisor Shares (6,656,885) -- -- --
Trust Shares -- -- (4,269,467) --
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (10,687,862) (2,396,450) (6,447,215) --
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 36,418,624 16,757,285 1,132,987 (113,747,380)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 90,604,482 44,827,348 (1,560,682) (97,067,946)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 193,144,123 148,316,775 29,294,434 126,362,380
------------- ------------- ------------- -------------
End of period $ 283,748,605 $ 193,144,123 $ 27,733,752 $ 29,294,434
============= ============= ============= =============
Accumulated net investment income (loss) $ 4,473,624 $ 3,030,485 $ -- $ --
============= ============= ============= =============
45 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERNATIONAL EQUITY FUND MID-CAP FUND
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 1,084,845 $ 364,447
Dividends reinvested -- -- 455,929 --
Cost of shares redeemed -- -- (371,463) (405,751)
------------ ------------ ----------- -------------
Class A Shares capital transactions -- -- 1,169,311 (41,304)
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 437,454 496,846
Dividends reinvested -- -- 1,661,260 --
Cost of shares redeemed -- -- (1,317,254) (1,227,997)
------------ ------------ ----------- -------------
Class B Shares capital transactions -- -- 781,460 (731,151)
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- 4,002 1,800
Dividends reinvested -- -- 25,282 --
Cost of shares redeemed -- -- (32,766) (25)
------------ ------------ ----------- -------------
Class C Shares capital transactions -- -- (3,482) 1,775
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 58,467,386 58,275,702 -- --
Dividend reinvested 7,069,762 1,241,344 -- --
Cost of shares redeemed (29,118,524) (42,759,761) -- --
------------ ------------ ----------- -------------
Advisor Shares capital transactions 36,418,624 16,757,285 -- --
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Proceeds from shares issued -- -- 2,741,624 5,350,460
Dividends reinvested -- -- 1,566,969 --
Cost of shares redeemed -- -- (5,122,895) (69,769,880)
Redemption In-Kind -- -- -- (48,557,280)
------------ ------------ ----------- -------------
Trust Shares capital transactions -- -- (814,302) (112,976,700)
------------ ------------ ----------- -------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 36,418,624 $ 16,757,285 $ 1,132,987 $(113,747,380)
============ ============ =========== =============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 126,901 38,102
Reinvested -- -- 54,997 --
Redeemed -- -- (41,265) (42,829)
------------ ------------ ----------- -------------
Change in Class A Shares -- -- 140,633 (4,727)
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 52,031 55,019
Reinvested -- -- 211,250 --
Redeemed -- -- (158,683) (134,933)
------------ ------------ ----------- -------------
Change in Class B Shares -- -- 104,598 (79,914)
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- 462 201
Reinvested -- -- 3,184 --
Redeemed -- -- (4,014) (3)
------------ ------------ ----------- -------------
Change in Class C Shares -- -- (368) 198
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 2,922,941 3,503,991 -- --
Reinvested 390,377 77,827 -- --
Redeemed (1,488,865) (2,539,074) -- --
------------ ------------ ----------- -------------
Change in Advisor Shares 1,824,453 1,042,744 -- --
------------ ------------ ----------- -------------
- ---------------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Issued -- -- 305,751 561,225
Reinvested -- -- 186,322 --
Redeemed -- -- (572,059) (7,160,908)
Redemption In-Kind -- -- -- (5,215,605)
------------ ------------ ----------- -------------
Change in Trust Shares -- -- (79,986) (11,815,288)
------------ ------------ ----------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 46
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY FUND OVERSEAS EQUITY FUND
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (342,572) $ (346,828) $ 288,789 $ 261,810
Net realized gains (losses) from investment and
foreign currency transactions 3,994,994 4,141,172 3,038,364 1,709,313
Change in unrealized appreciation/depreciation
from investments and foreign currencies 1,342,022 (361,730) 3,516,165 1,850,263
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 4,994,444 3,432,614 6,843,318 3,821,386
------------ ------------ ----------- ------------
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (326,916) (86,962)
Class B Shares -- -- (23,264) --
Class C Shares -- -- (1,601) --
NET REALIZED GAINS:
Class A Shares (711,320) -- (1,507,747) (1,064,452)
Class B Shares (150,813) -- (185,747) (122,864)
Class C Shares (10,198) -- (12,624) (7,702)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (872,331) -- (2,057,899) (1,281,980)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (2,312,697) (1,568,177) (1,874,669) 789,114
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS 1,809,416 1,864,437 2,910,750 3,328,520
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 27,720,663 25,856,226 23,247,739 19,919,219
------------ ------------ ----------- ------------
End of period $ 29,530,079 $ 27,720,663 $26,158,489 $ 23,247,739
============ ============ =========== ============
Accumulated net investment income (loss) $ -- $ -- $ 294,103 $ 247,876
============ ============ =========== ============
47 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY FUND OVERSEAS EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 3,495,715 $ 4,837,326 $ 3,898,094 $ 5,532,757
Dividends reinvested 703,432 -- 1,818,046 1,138,107
Cost of shares redeemed (6,056,187) (5,698,960) (7,848,982) (5,992,575)
------------ ------------ ----------- ------------
Class A Shares capital transactions (1,857,040) (861,634) (2,132,842) 678,289
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 253,088 244,211 426,797 342,387
Dividends reinvested 147,234 -- 204,672 119,012
Cost of shares redeemed (805,798) (877,468) (338,565) (360,874)
------------ ------------ ----------- ------------
Class B Shares capital transactions (405,476) (633,257) 292,904 100,525
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 2,010 16,069 4,254 11,807
Dividends reinvested 10,101 -- 14,125 7,641
Cost of shares redeemed (62,292) (89,355) (53,110) (9,148)
------------ ------------ ----------- ------------
Class C Shares capital transactions (50,181) (73,286) (34,731) 10,300
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (2,312,697) $ (1,568,177) $(1,874,669) $ 789,114
============ ============ =========== ============
- ----------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 255,030 411,566 228,774 375,295
Reinvested 54,419 -- 116,471 79,895
Redeemed (443,567) (481,625) (464,081) (400,918)
------------ ------------ ----------- ------------
Change in Class A Shares (134,118) (70,059) (118,836) 54,272
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 19,744 22,382 25,997 24,056
Reinvested 12,202 -- 13,637 8,435
Redeemed (63,328) (79,084) (20,687) (25,222)
------------ ------------ ----------- ------------
Change in Class B Shares (31,382) (56,702) 18,947 7,269
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 148 1,413 249 831
Reinvested 829 -- 922 544
Redeemed (4,807) (8,351) (3,034) (609)
------------ ------------ ----------- ------------
Change in Class C Shares (3,830) (6,938) (1,863) 766
------------ ------------ ----------- ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 48
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SMALL CAP EQUITY FUND VALUE FUND
- -------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (960,327) $ (1,207,469) $ 336,981 $ 360,402
Net realized gains (losses) from investment and
foreign currency transactions 31,062,646 47,977,577 4,265,780 3,260,840
Change in unrealized appreciation/depreciation
from investments and foreign currencies 2,986,040 (11,295,639) 3,709,021 3,423,080
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 33,088,359 35,474,469 8,311,782 7,044,322
------------ ------------ ----------- ------------
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (284,513) (125,206)
Class B Shares -- -- (8,626) --
Class C Shares -- -- (1,160) (294)
Class I Shares -- -- (229,486) (201,076)
NET REALIZED GAINS:
Class A Shares -- -- (1,923,289) (208,943)
Class B Shares -- -- (154,501) (18,614)
Class C Shares -- -- (29,129) (3,904)
Class I Shares -- -- (1,220,351) (241,526)
Advisor Shares (5,803,618) -- -- --
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (5,803,618) -- (3,851,055) (799,563)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (12,679,647) (137,624,740) (155,652) (14,599,343)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS 14,605,094 (102,150,271) 4,305,075 (8,354,584)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 177,518,678 279,668,949 40,513,912 48,868,496
------------ ------------ ----------- ------------
End of period $192,123,772 $177,518,678 $44,818,987 $ 40,513,912
============ ============ =========== ============
Accumulated net investment income (loss) $ -- $ -- $ 94,489 $ 294,913
============ ============ =========== ============
49 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SMALL CAP EQUITY FUND VALUE FUND
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- 3,803,760 $ 6,244,508
Dividends reinvested -- -- 2,187,527 332,959
Cost of shares redeemed -- -- (7,101,747) (6,994,075)
------------ ------------- ----------- -------------
Class A Shares capital transactions -- -- (1,110,460) (416,608)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 108,230 221,506
Dividends reinvested -- -- 158,811 18,074
Cost of shares redeemed -- -- (281,760) (645,696)
------------ ------------- ----------- -------------
Class B Shares capital transactions -- -- (14,719) (406,116)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- 1,051 1,918
Dividends reinvested -- -- 30,205 4,190
Cost of shares redeemed -- -- (287,134) (66,676)
------------ ------------- ----------- -------------
Class C Shares capital transactions -- -- (255,878) (60,568)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued -- -- 2,983,526 3,422,732
Dividends reinvested -- -- 1,363,115 388,870
Cost of shares redeemed -- -- (3,121,236) (17,527,653)
------------ ------------- ----------- -------------
Class I Shares capital transactions -- -- 1,225,405 (13,716,051)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 15,925,063 14,466,184 -- --
Dividends reinvested 4,071,601 -- -- --
Cost of shares redeemed (32,676,311) (90,280,738) -- --
Redemption In-Kind -- (61,810,186) -- --
------------ ------------- ----------- -------------
Advisor Shares capital transactions (12,679,647) (137,624,740) -- --
------------ ------------- ----------- -------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(12,679,647) $(137,624,740) $ (155,652) $ (14,599,343)
============ ============= =========== =============
- ----------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 245,996 432,340
Reinvested -- -- 149,309 23,041
Redeemed -- -- (459,025) (479,115)
------------ ------------- ----------- -------------
Change in Class A Shares -- -- (63,720) (23,734)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 7,211 15,903
Reinvested -- -- 11,270 1,182
Redeemed -- -- (18,887) (45,745)
------------ ------------- ----------- -------------
Change in Class B Shares -- -- (406) (28,660)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- 69 131
Reinvested -- -- 2,131 299
Redeemed -- -- (18,964) (4,608)
------------ ------------- ----------- -------------
Change in Class C Shares -- -- (16,764) (4,178)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued -- -- 193,483 237,945
Reinvested -- -- 93,166 26,943
Redeemed -- -- (201,427) (1,184,279)
------------ ------------- ----------- -------------
Change in Class I Shares -- -- 85,222 (919,391)
------------ ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 962,234 1,031,358 -- --
Reinvested 262,486 -- -- --
Redeemed (1,990,135) (6,178,289) -- --
Redemption In-Kind -- (4,362,046) -- --
------------ ------------- ----------- -------------
Change in Advisor Shares (765,415) (9,508,977) -- --
------------ ------------- ----------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 50
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--CORE PLUS FIXED INCOME FUND (ADVISOR)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------------------
NET
REALIZED
NET REALIZED AND GAINS
UNREALIZED GAINS FROM
NET ASSET NET (LOSSES) FROM INVESTMENTS
VALUE, INVESTMENT INVESTMENT AND TOTAL FROM NET AND
BEGINNING OF INCOME FUTURES INVESTMENT INVESTMENT FUTURES TOTAL
PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $10.81 0.55 (0.14) 0.41 (0.59) -- (0.59)
Year ended October 31, 2003 10.63 0.41 0.19 0.60 (0.50) -- (0.50)
Year ended October 31, 2004 10.73 0.45 0.12 0.57 (0.45) -- (0.45)
Year ended October 31, 2005 10.85 0.44 (0.27) 0.17 (0.47) -- (0.47)
Year ended October 31, 2006 10.55 0.53 0.02 0.55 (0.51) (0.46) (0.97)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $10.63 3.94% $ 284,841 0.56% 5.06% 0.56% 77.82%
Year ended October 31, 2003 10.73 5.71% 110,968 0.56% 4.30% 0.56% 70.91%
Year ended October 31, 2004 10.85 5.46% 109,518 0.64% 4.20% 0.64% 34.88%
Year ended October 31, 2005 10.55 1.55%(f) 89,743 0.52%(f) 4.15%(f) 0.52%(f) 176.60%
Year ended October 31, 2006 10.13 5.56% 80,976 0.56% 5.05% 0.80% 273.91%
- ------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11% for the Advisor Shares.
SEE NOTES TO FINANCIAL STATEMENTS.
51 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--CORE PLUS FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------------------
NET REALIZED AND NET
UNREALIZED GAINS REALIZED
NET ASSET NET (LOSSES) FROM GAINS FROM
VALUE, INVESTMENT INVESTMENT AND TOTAL FROM NET INVESTMENT
BEGINNING OF INCOME FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL
PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.55 0.49 (0.14) 0.35 (0.52) -- (0.52)
Year ended October 31, 2003 10.38 0.40 0.13 0.53 (0.43) -- (0.43)
Year ended October 31, 2004 10.48 0.40 0.12 0.52 (0.40) -- (0.40)
Year ended October 31, 2005 10.60 0.39 (0.27) 0.12 (0.42) -- (0.42)
Year ended October 31, 2006 10.30 0.49* 0.05 0.54 (0.49) (0.05) (0.54)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.55 0.41 (0.13) 0.28 (0.44) -- (0.44)
Year ended October 31, 2003 10.39 0.32 0.13 0.45 (0.35) -- (0.35)
Year ended October 31, 2004 10.49 0.32 0.11 0.43 (0.32) -- (0.32)
Year ended October 31, 2005 10.60 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year ended October 31, 2006 10.31 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.54 0.41 (0.13) 0.28 (0.44) -- (0.44)
Year ended October 31, 2003 10.38 0.32 0.13 0.45 (0.35) -- (0.35)
Year ended October 31, 2004 10.48 0.32 0.11 0.43 (0.32) -- (0.32)
Year ended October 31, 2005 10.59 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year ended October 31, 2006 10.30 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES TO INCOME TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE AVERAGE AVERAGE PORTFOLIO
PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) NET ASSETS(c)(d) TURNOVER(e)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.38 3.44% $12,053 1.10% 4.52% 1.47% 77.82%
Year ended October 31, 2003 10.48 5.17% 14,143 1.10% 3.76% 1.21% 70.91%
Year ended October 31, 2004 10.60 5.07% 17,248 1.04% 3.78% 1.26% 34.88%
Year ended October 31, 2005 10.30 1.16%(f) 17,646 0.84%(f) 3.82%(f) 1.15%(f) 176.60%
Year ended October 31, 2006 10.30 5.45% 12,248 0.79% 4.82% 1.43% 273.91%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.39 2.76% $ 6,124 1.85% 3.66% 2.18% 77.82%
Year ended October 31, 2003 10.49 4.38% 7,430 1.85% 3.01% 1.96% 70.91%
Year ended October 31, 2004 10.60 4.19% 7,017 1.79% 3.05% 2.01% 34.88%
Year ended October 31, 2005 10.31 0.50%(f) 6,168 1.59%(f) 3.08%(f) 1.90%(f) 176.60%
Year ended October 31, 2006 10.31 4.67% 4,267 1.54% 4.06% 2.19% 273.91%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.38 2.77% $ 983 1.85% 3.75% 2.21% 77.82%
Year ended October 31, 2003 10.48 4.39% 606 1.85% 3.06% 1.97% 70.91%
Year ended October 31, 2004 10.59 4.20% 377 1.80% 3.07% 2.02% 34.88%
Year ended October 31, 2005 10.30 0.51%(f) 285 1.58%(f) 3.14%(f) 1.89%(f) 176.60%
Year ended October 31, 2006 10.30 4.67% 236 1.54% 4.07% 2.19% 273.91%
- ----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11%, 0.11% and 0.12% for Class A Shares, Class B Shares and
Class C Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 52
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--HIGH YIELD FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ ----------------------
NET REALIZED AND
NET ASSET NET UNREALIZED GAINS
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET NET ASSET
BEGINNING OF INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL VALUE, END TOTAL
PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS OF PERIOD RETURN(b)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31,
2006 (f) $10.00 0.69 0.12 0.81 (0.68) (0.68) $10.13 8.38%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2006 (g) $10.00 0.62 0.13 0.75 (0.61) (0.61) $10.14 7.68%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2006 (h) $10.01 0.58 0.15 0.73 (0.58) (0.58) $10.16 7.42%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31,
2006 (i) $10.00 0.71 0.14 0.85 (0.71) (0.71) $10.14 8.73%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------------
RATIO OF NET
NET ASSETS AT RATIO OF INVESTMENT RATIO OF
END OF EXPENSES TO INCOME TO EXPENSES TO
PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO
(000'S) NET ASSETS(c) ASSETS(c) NET ASSETS(c)(d) TURNOVER(e)
- --------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31,
2006 (f) $4,742 0.80% 7.27% 3.53% 13.61%
- --------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2006 (g) $2,106 1.55% 6.65% 4.26% 13.61%
- --------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2006 (h) $ 241 1.55% 6.65% 4.29% 13.61%
- --------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31,
2006 (i) $2,568 0.55% 7.53% 3.29% 13.61%
- --------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor High Yield Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares commenced operations on November 18, 2005.
(g) Class B Shares commenced operations on November 21, 2005.
(h) Class C Shares commenced operations on December 14, 2005.
(i) Class I Shares commenced operations on November 18, 2005.
SEE NOTES TO FINANCIAL STATEMENTS.
53 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--INTERMEDIATE DURATION FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------ -----------------------------------
NET
REALIZED
AND
UNREALIZED
GAINS NET
NET ASSET NET (LOSSES) TOTAL REALIZED
VALUE, INVESTMENT FROM FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 10.58 0.44 (0.10) 0.34 (0.44) (0.05) (0.49)
Year ended October 31, 2003 10.43 0.33 0.08 0.41 (0.37) -- (0.37)
Year ended October 31, 2004 10.47 0.32* 0.06 0.38 (0.33) (0.46) (0.79)
Year ended October 31, 2005 10.06 0.33 (0.29) 0.04 (0.37) (0.06) (0.43)
Year ended October 31, 2006 9.67 0.45 0.05 0.50 (0.45) -- (0.45)
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 10.59 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.45 0.25 0.08 0.33 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.23 0.08 0.31 (0.26) (0.46) (0.72)
Year ended October 31, 2005 10.08 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year ended October 31, 2006 9.69 0.38 0.04 0.42 (0.38) -- (0.38)
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 10.58 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.44 0.25 0.09 0.34 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.22* 0.08 0.30 (0.26) (0.46) (0.72)
Year ended October 31, 2005 10.07 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year ended October 31, 2006 9.68 0.38 0.05 0.43 (0.38) -- (0.38)
- ------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 10.59 0.46 (0.09) 0.37 (0.46) (0.05) (0.51)
Year ended October 31, 2003 10.45 0.33 0.10 0.43 (0.40) -- (0.40)
Year ended October 31, 2004 10.48 0.33 0.09 0.42 (0.36) (0.46) (0.82)
Year ended October 31, 2005 10.08 0.35 (0.30) 0.05 (0.39) (0.06) (0.45)
Year ended October 31, 2006 9.68 0.47 0.05 0.52 (0.47) -- (0.47)
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------
RATIO OF
NET RATIO OF NET
NET ASSETS EXPENSES INVESTMENT
ASSET AT END TO INCOME TO RATIO OF
VALUE, OF AVERAGE AVERAGE EXPENSES TO
END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 10.43 3.34% $ 1,608 0.96% 4.14% 0.96% 44.04%
Year ended October 31, 2003 10.47 3.97% 3,309 1.01% 2.99% 1.01% 98.42%
Year ended October 31, 2004 10.06 3.90% 1,558 1.10% 3.01% 1.21% 50.06%
Year ended October 31, 2005 9.67 0.31%(f) 1,055 1.01%(f) 3.37%(f) 1.10%(f) 107.26%
Year ended October 31, 2006 9.72 5.30% 976 0.80% 4.61% 1.65% 236.51%
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 10.45 2.65% $ 4,178 1.70% 3.30% 1.70% 44.04%
Year ended October 31, 2003 10.49 3.19% 6,443 1.73% 2.30% 1.73% 98.42%
Year ended October 31, 2004 10.08 3.11% 6,321 1.85% 2.28% 1.96% 50.06%
Year ended October 31, 2005 9.69 (0.44)%(f) 4,852 1.76%(f) 2.60%(f) 1.85%(f) 107.26%
Year ended October 31, 2006 9.73 4.40% 3,738 1.56% 3.84% 2.40% 236.51%
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 10.44 2.65% $ 1,759 1.70% 3.26% 1.70% 44.04%
Year ended October 31, 2003 10.49 3.29% 2,544 1.73% 2.31% 1.73% 98.42%
Year ended October 31, 2004 10.07 3.03% 679 1.85% 2.25% 1.96% 50.06%
Year ended October 31, 2005 9.68 (0.44)%(f) 527 1.77%(f) 2.60%(f) 1.86%(f) 107.26%
Year ended October 31, 2006 9.73 4.51% 503 1.55% 3.86% 2.40% 236.51%
- ------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 10.45 3.69% $ 94,886 0.71% 4.42% 0.71% 44.04%
Year ended October 31, 2003 10.48 4.12% 31,368 0.69% 3.62% 0.69% 98.42%
Year ended October 31, 2004 10.08 4.25% 31,217 0.85% 3.28% 0.96% 50.06%
Year ended October 31, 2005 9.68 0.45%(f) 24,744 0.76%(f) 3.60%(f) 0.85%(f) 107.26%
Year ended October 31, 2006 9.73 5.56% 13,000 0.58% 4.77% 1.38% 236.51%
- ------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Intermediate Duration Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.09%, 0.09%, 0.09% and 0.08% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 54
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------ -----------------------------------
NET
REALIZED
AND
UNREALIZED
GAINS NET
(LOSSES) REALIZED
NET ASSET NET FROM TOTAL GAINS FROM
VALUE, INVESTMENT INVESTMENT FROM NET INVESTMENT
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 10.93 0.38 0.16 0.54 (0.38) -- (0.38)
Year ended October 31, 2003 11.09 0.38 0.12 0.50 (0.38) -- (0.38)
Year ended October 31, 2004 11.21 0.34 0.17 0.51 (0.34) (0.06) (0.40)
Year ended October 31, 2005 11.32 0.34 (0.22) 0.12 (0.34) (0.02) (0.36)
Year ended October 31, 2006 11.08 0.37 0.12 0.49 (0.37) (0.02) (0.39)
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 10.92 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31, 2003 11.08 0.30 0.12 0.42 (0.30) -- (0.30)
Year ended October 31, 2004 11.20 0.25 0.17 0.42 (0.25) (0.06) (0.31)
Year ended October 31, 2005 11.31 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year ended October 31, 2006 11.07 0.28 0.12 0.40 (0.28) (0.02) (0.30)
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 10.96 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31, 2003 11.12 0.30 0.13 0.43 (0.30) -- (0.30)
Year ended October 31, 2004 11.25 0.25 0.16 0.41 (0.25) (0.06) (0.31)
Year ended October 31, 2005 11.35 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year ended October 31, 2006 11.11 0.28 0.12 0.40 (0.28) (0.02) (0.30)
- ------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 10.93 0.41 0.16 0.57 (0.41) -- (0.41)
Year ended October 31, 2003 11.09 0.41 0.12 0.53 (0.41) -- (0.41)
Year ended October 31, 2004 11.21 0.37 0.17 0.54 (0.37) (0.06) (0.43)
Year ended October 31, 2005 11.32 0.37 (0.22) 0.15 (0.37) (0.02) (0.39)
Year ended October 31, 2006 11.08 0.39 0.12 0.51 (0.39) (0.02) (0.41)
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------
RATIO OF
NET RATIO OF NET
NET ASSETS EXPENSES INVESTMENT
ASSET AT END TO INCOME TO RATIO OF
VALUE, OF AVERAGE AVERAGE EXPENSES TO
END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
PERIOD RETURN(a) (000'S) ASSETS(b) ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 11.09 5.08% $ 16,341 0.95% 3.52% 0.95% 30.70%
Year ended October 31, 2003 11.21 4.57% 22,326 0.91% 3.39% 0.91% 29.79%
Year ended October 31, 2004 11.32 4.57% 32,889 0.87% 3.01% 0.87% 26.96%
Year ended October 31, 2005 11.08 1.03%(e) 34,441 0.88%(e) 3.02%(e) 0.89% 13.87%
Year ended October 31, 2006 11.18 4.45% 32,727 0.93% 3.30% 0.93% 12.69%
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 11.08 4.30% $ 12,699 1.70% 2.74% 1.70% 30.70%
Year ended October 31, 2003 11.20 3.80% 18,352 1.66% 2.64% 1.66% 29.79%
Year ended October 31, 2004 11.31 3.80% 17,457 1.62% 2.27% 1.62% 26.96%
Year ended October 31, 2005 11.07 0.28%(e) 16,258 1.63%(e) 2.27%(e) 1.64% 13.87%
Year ended October 31, 2006 11.17 3.67% 13,735 1.68% 2.56% 1.68% 12.69%
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 11.12 4.28% $ 2,608 1.70% 2.74% 1.70% 30.70%
Year ended October 31, 2003 11.25 3.87% 3,252 1.66% 2.64% 1.66% 29.79%
Year ended October 31, 2004 11.35 3.69% 2,340 1.62% 2.26% 1.62% 26.96%
Year ended October 31, 2005 11.11 0.28%(e) 1,782 1.63%(e) 2.26%(e) 1.64% 13.87%
Year ended October 31, 2006 11.21 3.66% 1,246 1.68% 2.55% 1.68% 12.69%
- ------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 11.09 5.34% $ 19,753 0.70% 3.76% 0.70% 30.70%
Year ended October 31, 2003 11.21 4.84% 20,290 0.67% 3.67% 0.67% 29.79%
Year ended October 31, 2004 11.32 4.83% 19,908 0.62% 3.27% 0.62% 26.96%
Year ended October 31, 2005 11.08 1.28%(e) 16,981 0.63%(e) 3.27%(e) 0.64% 13.87%
Year ended October 31, 2006 11.18 4.71% 13,746 0.68% 3.55% 0.68% 12.69%
- ------------------------------------------------------------------------------------------------------------------
(a) Not Annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.01%, 0.01%, 0.01% and 0.01% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
55 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
-------------------------------------- -------------------------------------
NET REALIZED
AND
UNREALIZED
GAINS NET
NET ASSET NET (LOSSES) TOTAL REALIZED
VALUE, INVESTMENT FROM FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004 (f) $ 12.68 (0.02) (0.11) (0.13) -- -- --
Year ended October 31, 2005 12.55 0.03 1.59 1.62 (0.05) -- (0.05)
Year ended October 31, 2006 14.12 (0.02)* 0.99 0.97 -- (0.23) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004 (f) $ 12.28 (0.07) (0.10) (0.17) -- -- --
Year ended October 31, 2005 12.11 (0.07) 1.53 1.46 -- -- --
Year ended October 31, 2006 13.57 (0.12)* 0.95 0.83 -- (0.23) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $ 12.35 (0.06) (0.12) (0.18) -- -- --
Year ended October 31, 2005 12.17 (0.07) 1.54 1.47 -- -- --
Year ended October 31, 2006 13.64 (0.13)* 0.96 0.83 -- (0.23) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004 (f) $ 12.67 (0.01) (0.11) (0.12) -- -- --
Year ended October 31, 2005 12.55 0.06 1.59 1.65 (0.08) -- (0.08)
Year ended October 31, 2006 14.12 0.02* 0.99 1.01 -- (0.23) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------
RATIO OF
NET
INVESTMENT
INCOME RATIO OF
NET ASSETS RATIO OF (LOSS) TO EXPENSES
NET ASSET AT END OF EXPENSES TO AVERAGE TO AVERAGE
VALUE, END TOTAL PERIOD AVERAGE NET NET NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004 (f) $ 12.55 (1.03)% $ 17,372 1.20% (0.42)% 1.31% 53.08%
Year ended October 31, 2005 14.12 12.91%(g) 21,866 1.15%(g) 0.19%(g) 1.35%(g) 79.54%
Year ended October 31, 2006 14.86 6.92% 21,985 1.20% (0.14)% 1.44% 75.06%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004 (f) $ 12.11 (1.38)% $ 1,402 1.95% (1.17)% 2.06% 53.08%
Year ended October 31, 2005 13.57 12.06%(g) 1,317 1.90%(g) (0.48)%(g) 2.09%(g) 79.54%
Year ended October 31, 2006 14.17 6.16% 1,446 1.95% (0.88)% 2.19% 75.06%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $ 12.17 (1.46)% $ 309 1.95% (1.18)% 2.06% 53.08%
Year ended October 31, 2005 13.64 12.08%(g) 344 1.90%(g) (0.51)%(g) 2.10%(g) 79.54%
Year ended October 31, 2006 14.24 6.13% 270 1.95% (0.89)% 2.18% 75.06%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004 (f) $ 12.55 0.95% $ 19,115 0.95% (0.17)% 1.06% 53.08%
Year ended October 31, 2005 14.12 13.17%(g) 13,107 0.90%(g) 0.56%(g) 1.07%(g) 79.54%
Year ended October 31, 2006 14.90 7.21% 15,042 0.95% 0.12% 1.19% 75.06%
- -------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Growth Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 7, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 56
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
-------------------------------------- ----------------------
NET REALIZED
AND
UNREALIZED
GAINS
NET ASSET NET (LOSSES) TOTAL
VALUE, INVESTMENT FROM FROM NET
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- ---------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 8.91 0.04 (1.73) (1.69) (0.01) (0.01)
Year ended October 31, 2003 7.21 0.06 1.18 1.24 (0.06) (0.06)
Year ended October 31, 2004 8.39 0.05 0.36 0.41 (0.04) (0.04)
Year ended October 31, 2005 8.76 0.07 1.01 1.08 (0.09) (0.09)
Year ended October 31, 2006 9.75 (0.02)* 1.25 1.23 -- --
- ---------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 8.88 (0.00)> (1.74) (1.74) -- --
Year ended October 31, 2003 7.14 (0.01) 1.18 1.17 (0.01) (0.01)
Year ended October 31, 2004 8.30 (0.02)* 0.36 0.34 (0.00)> (0.00)>
Year ended October 31, 2005 8.64 (0.01) 1.01 1.00 (0.03) (0.03)
Year ended October 31, 2006 9.61 (0.10)* 1.23 1.13 -- --
- ---------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03)
Year ended October 31, 2005 8.73 (0.01) 1.02 1.01 (0.04) (0.04)
Year ended October 31, 2006 9.70 (0.09)* 1.22 1.13 -- --
- ---------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 8.92 0.06 (1.73) (1.67) (0.03) (0.03)
Year ended October 31, 2003 7.22 0.07 1.19 1.26 (0.08) (0.08)
Year ended October 31, 2004 8.40 0.07 0.36 0.43 (0.06) (0.06)
Year ended October 31, 2005 8.77 0.10 0.99 1.10 (0.12) (0.12)
Year ended October 31, 2006 9.75 0.01* 1.25 1.26 (0.01) (0.01)
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------
RATIO OF
NET
INVESTMENT
INCOME RATIO OF
NET ASSETS RATIO OF (LOSS) TO EXPENSES
NET ASSET AT END OF EXPENSES TO AVERAGE TO AVERAGE
VALUE, END TOTAL PERIOD AVERAGE NET NET NET PORTFOLIO
OF PERIOD RETURN(a) (000'S) ASSETS(b) ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 7.21 (18.97)% $ 1,306 1.01% 0.39% 1.01% 59.85%
Year ended October 31, 2003 8.39 17.26% 1,827 1.04% 0.70% 1.04% 64.52%
Year ended October 31, 2004 8.76 4.94% 1,500 1.02% 0.50% 1.02% 73.68%
Year ended October 31, 2005 9.75 12.36%(e) 1,260 1.11%(e) 0.73%(e) 1.16% 106.49%
Year ended October 31, 2006 10.98 12.62% 1,394 1.26% (0.22)% 1.47% 34.85%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 7.14 (19.59)% $ 1,154 1.76% (0.30)% 1.76% 59.85%
Year ended October 31, 2003 8.30 16.40% 2,235 1.79% (0.07)% 1.79% 64.52%
Year ended October 31, 2004 8.64 4.13% 3,820 1.77% (0.25)% 1.77% 73.68%
Year ended October 31, 2005 9.61 11.61%(e) 4,194 1.87%(e) (0.10)%(e) 1.93% 106.49%
Year ended October 31, 2006 10.74 11.76% 4,537 2.01% (0.97)% 2.22% 34.85%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $ 8.73 3.57% $ 41 1.77% (0.28)% 1.77% 73.68%
Year ended October 31, 2005 9.70 11.59%(e) 49 1.88%(e) (0.13)%(e) 1.93% 106.49%
Year ended October 31, 2006 10.83 11.65% 35 2.01% (0.90)% 2.22% 34.85%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 7.22 (18.76)% $168,812 0.76% 0.66% 0.76% 59.85%
Year ended October 31, 2003 8.40 17.63% 203,458 0.79% 0.96% 0.79% 64.52%
Year ended October 31, 2004 8.77 5.18% 196,219 0.77% 0.77% 0.77% 73.68%
Year ended October 31, 2005 9.75 12.61%(e) 46,888 0.80%(e) 1.20%(e) 0.86% 106.49%
Year ended October 31, 2006 11.00 12.88% 40,925 1.01% 0.04% 1.22% 34.85%
- -------------------------------------------------------------------------------------------------------------------------------
> Less than $0.005 per share.
* Calculated based on average shares outstanding.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.02%, 0.02%, 0.02% and 0.03% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
(f) Class C Shares commenced operations on November 3, 2003.
SEE NOTES TO FINANCIAL STATEMENTS.
57 HSBC INVESTOR FAMILY OF FUNDS
HSBC ADVISOR FUNDS TRUST--INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
-------------------------------------- -------------------------------------
NET
REALIZED
AND
UNREALIZED
GAINS NET
(LOSSES) REALIZED
FROM GAINS FROM
NET ASSET NET INVESTMENT TOTAL INVESTMENT
VALUE, INVESTMENT AND FOREIGN FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $ 12.56 0.09 (1.73) (1.64) (0.19) -- (0.19)
Year ended October 31, 2003 10.73 0.20 2.02 2.22 (0.19) -- (0.19)
Year ended October 31, 2004 12.76 0.18 2.32 2.50 (0.39) -- (0.39)
Year ended October 31, 2005 14.87 0.31 2.59 2.90 (0.23) -- (0.23)
Year ended October 31, 2006 17.54 0.38 5.14 5.52 (0.36) (0.60) (0.96)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------
RATIO OF
RATIO OF NET
NET NET EXPENSES INVESTMENT
ASSET ASSETS AT TO INCOME TO RATIO OF
VALUE, END OF AVERAGE AVERAGE EXPENSES TO
END TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -----------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $ 10.73 (13.32)% $ 194,704 0.99% 0.70% 0.99% 31.63%
Year ended October 31, 2003 12.76 21.03% 123,658 1.07% 1.16% 1.07% 68.51%
Year ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 1.05% 106.11%
Year ended October 31, 2005 17.54 19.69% 193,144 0.92% 2.01% 0.92% 31.32%
Year ended October 31, 2006 22.10 32.70% 283,749 0.97% 2.02% 0.97% 33.39%
- -----------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its inevitable assets.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 58
HSBC INVESTOR FUNDS--MID-CAP FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------- -----------------------
NET REALIZED
AND
UNREALIZED
GAINS NET
(LOSSES) REALIZED
NET ASSET NET FROM GAINS FROM
VALUE, INVESTMENT INVESTMENTS TOTAL FROM INVESTMENTS
BEGINNING INCOME AND OPTIONS INVESTMENT AND OPTIONS TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 7.90 (0.03) (1.57) (1.60) -- --
Year ended October 31, 2003 6.30 (0.03)* 1.68 1.65 -- --
Year ended October 31, 2004 7.95 (0.04)* 0.53 0.49 -- --
Year ended October 31, 2005 8.44 (0.06)* 1.49 1.43 -- --
Year ended October 31, 2006 9.87 (0.00)*> 1.19 1.19 (2.18) (2.18)
- -----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 7.82 (0.08) (1.55) (1.63) -- --
Year ended October 31, 2003 6.19 (0.08) 1.64 1.56 -- --
Year ended October 31, 2004 7.75 (0.10)* 0.51 0.41 -- --
Year ended October 31, 2005 8.16 (0.13)* 1.45 1.32 -- --
Year ended October 31, 2006 9.48 (0.06)* 1.13 1.07 (2.18) (2.18)
- -----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 7.82 (0.08) (1.54) (1.62) -- --
Year ended October 31, 2003 6.20 (0.08) 1.68 1.60 -- --
Year ended October 31, 2004 7.80 (0.10)* 0.52 0.42 -- --
Year ended October 31, 2005 8.22 (0.13)* 1.45 1.32 -- --
Year ended October 31, 2006 9.54 (0.06)* 1.15 1.09 (2.18) (2.18)
- -----------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year ended October 31, 2002 $ 7.91 (0.02) (1.56) (1.58) -- --
Year ended October 31, 2003 6.33 (0.01) 1.69 1.68 -- --
Year ended October 31, 2004 8.01 (0.02)* 0.53 0.51 -- --
Year ended October 31, 2005 8.52 (0.02)* 1.48 1.46 -- --
Year ended October 31, 2006 9.98 0.03 * 1.20 1.23 (2.18) (2.18)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------
RATIO OF
RATIO OF NET
NET NET EXPENSES INVESTMENT
ASSET ASSETS AT TO (LOSS) TO RATIO OF
VALUE, END OF AVERAGE AVERAGE EXPENSES TO
END TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
OF PERIOD RETURN(a) (000'S) ASSETS(b) ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 6.30 (20.25)% $ 1,010 1.08% (0.46)% 1.08% 140.23%
Year ended October 31, 2003 7.95 26.19% 1,539 1.10% (0.43)% 1.10% 100.86%
Year ended October 31, 2004 8.44 6.16% 1,878 1.09% (0.54)% 1.09% 106.72%
Year ended October 31, 2005 9.87 16.94%(e) 2,151 1.38%(e) (0.65)%(e) 1.53% 169.62%
Year ended October 31, 2006 8.88 13.66% 3,185 1.48% (0.01)% 1.85% 53.16%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 6.19 (20.84)% $ 4,391 1.83% (1.21)% 1.83% 140.23%
Year ended October 31, 2003 7.75 25.20% 6,009 1.85% (1.16)% 1.85% 100.86%
Year ended October 31, 2004 8.16 5.29% 7,037 1.84% (1.29)% 1.84% 106.72%
Year ended October 31, 2005 9.48 16.18%(e) 7,415 2.11%(e) (1.38)%(e) 2.27% 169.62%
Year ended October 31, 2006 8.37 12.78% 7,425 2.25% (0.72)% 2.60% 53.16%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 6.20 (20.72)% $ 20 1.83% (1.20)% 1.83% 140.23%
Year ended October 31, 2003 7.80 25.81% 54 1.85% (1.23)% 1.85% 100.86%
Year ended October 31, 2004 8.22 5.38% 94 1.84% (1.29)% 1.84% 106.72%
Year ended October 31, 2005 9.54 16.06%(e) 111 2.13%(e) (1.40)%(e) 2.28% 169.62%
Year ended October 31, 2006 8.45 12.93% 95 2.25% (0.72)% 2.60% 53.16%
- -----------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year ended October 31, 2002 $ 6.33 (19.97)% $ 98,059 0.82% (0.18)% 0.82% 140.23%
Year ended October 31, 2003 8.01 26.54% 160,621 0.85% (0.17)% 0.85% 100.86%
Year ended October 31, 2004 8.52 6.37% 117,354 0.84% (0.28)% 0.84% 106.72%
Year ended October 31, 2005 9.98 17.14%(e) 19,618 0.89%(e) (0.19)%(e) 1.02% 169.62%
Year ended October 31, 2006 9.03 13.97% 17,029 1.26% 0.29 % 1.60% 53.16%
- -----------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio and net
income ratio were 0.10%, 0.10%, 0.10% and 0.09% for Class A Shares, Class
B Shares, Class C Shares and Trust Shares, respectively. The corresponding
impact to the total return was 0.57%, 0.57%, 0.57% and 0.56% for Class A
Shares, Class B Shares, Class C Shares and Trust Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
59 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OPPORTUNITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------ -----------------------
NET
REALIZED
AND NET
UNREALIZED REALIZED
GAINS GAINS
NET ASSET NET (LOSSES) TOTAL (LOSSES)
VALUE, INVESTMENT FROM FROM FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 9.60 (0.13) (1.64) (1.77) -- --
Year ended October 31, 2003 7.83 (0.10) 2.63 2.53 -- --
Year ended October 31, 2004 10.36 (0.13) 0.68 0.55 -- --
Year ended October 31, 2005 10.91 (0.14) 1.62 1.48 -- --
Year ended October 31, 2006 12.39 (0.14)* 2.43 2.29 (0.39) (0.39)
- -----------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 9.27 (0.20)* (1.56) (1.76) -- --
Year ended October 31, 2003 7.51 (0.18)* 2.52 2.34 -- --
Year ended October 31, 2004 9.85 (0.20) 0.64 0.44 -- --
Year ended October 31, 2005 10.29 (0.22) 1.53 1.31 -- --
Year ended October 31, 2006 11.60 (0.23)* 2.27 2.04 (0.39) (0.39)
- -----------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 9.35 (0.21)* (1.57) (1.78) -- --
Year ended October 31, 2003 7.57 (0.18) 2.55 2.37 -- --
Year ended October 31, 2004 9.94 (0.22) 0.67 0.45 -- --
Year ended October 31, 2005 10.39 (0.21) 1.53 1.32 -- --
Year ended October 31, 2006 11.71 (0.23)* 2.29 2.06 (0.39) (0.39)
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------
RATIO OF
NET NET
NET ASSETS INVESTMENT
ASSET AT END RATIO OF (LOSS) TO RATIO OF
VALUE, OF EXPENSES TO AVERAGE EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET NET AVERAGE NET PORTFOLIO
PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 7.83 (18.44)% $11,384 1.65% (1.45)% 2.08% 103.90%
Year ended October 31, 2003 10.36 32.31% 16,695 1.65% (1.36)% 2.09% 152.05%
Year ended October 31, 2004 10.91 5.31% 20,902 1.61% (1.24)% 1.72% 81.75%
Year ended October 31, 2005 12.39 13.57%(f) 22,875 1.51%(f) (1.11)%(f) 1.69%(f) 63.95%
Year ended October 31, 2006 14.29 18.81% 24,463 1.55% (1.04)% 1.70% 60.83%
- ----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 7.51 (18.99)% $ 2,374 2.40% (2.18)% 2.86% 103.90%
Year ended October 31, 2003 9.85 31.16% 3,952 2.40% (2.11)% 2.83% 152.05%
Year ended October 31, 2004 10.29 4.47% 4,611 2.36% (2.00)% 2.47% 81.75%
Year ended October 31, 2005 11.60 12.73%(f) 4,539 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year ended October 31, 2006 13.25 17.91% 4,768 2.30% (1.79)% 2.45% 60.83%
- ----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 7.57 (19.04)% $ 329 2.40% (2.20)% 2.83% 103.90%
Year ended October 31, 2003 9.94 31.31% 395 2.40% (2.11)% 2.84% 152.05%
Year ended October 31, 2004 10.39 4.53% 344 2.37% (2.00)% 2.48% 81.75%
Year ended October 31, 2005 11.71 12.70%(f) 306 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year ended October 31, 2006 13.38 17.92% 299 2.30% (1.78)% 2.45% 60.83%
- ----------------------------------------------------------------------------------------------------------------
* Calculated using average shares.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Small Cap Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.04%, 0.04% and 0.04% for Class A Shares, Class B Shares and
Class C Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 60
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OVERSEAS EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------ -----------------------------------
NET
REALIZED
AND
UNREALIZED
GAINS NET
(LOSSES) REALIZED
FROM GAINS FROM
INVESTMENT INVESTMENT
NET ASSET NET AND TOTAL AND
VALUE, INVESTMENT FOREIGN FROM NET FOREIGN
BEGINNING OF INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 11.66 (0.04) (1.34) (1.38) (0.12) (0.29) (0.41)
Year ended October 31, 2003 9.87 0.01 1.95 1.96 (0.10) -- (0.10)
Year ended October 31, 2004 11.73 0.08 2.19 2.27 (0.07) -- (0.07)
Year ended October 31, 2005 13.93 0.18 2.33 2.51 (0.06) (0.79) (0.85)
Year ended October 31, 2006 15.59 0.22 4.45 4.67 (0.25) (1.16) (1.41)
- --------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 11.30 (0.08) (1.34) (1.42) (0.03) (0.29) (0.32)
Year ended October 31, 2003 9.56 (0.06) 1.89 1.83 (0.05) -- (0.05)
Year ended October 31, 2004 11.34 0.01* 2.08 2.09 -- -- --
Year ended October 31, 2005 13.43 0.07 2.24 2.31 -- (0.79) (0.79)
Year ended October 31, 2006 14.95 0.09 4.26 4.35 (0.14) (1.16) (1.30)
- --------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 11.41 (0.08) (1.36) (1.44) -- (0.29) (0.29)
Year ended October 31, 2003 9.68 (0.06) 1.93 1.87 (0.01) -- (0.01)
Year ended October 31, 2004 11.54 (0.01) 2.14 2.13 -- -- --
Year ended October 31, 2005 13.67 0.06 2.29 2.35 -- (0.79) (0.79)
Year ended October 31, 2006 15.23 0.11 4.33 4.44 (0.14) (1.16) (1.30)
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------
RATIO OF
NET
NET RATIO OF INVESTMENT
NET ASSETS EXPENSES INCOME
ASSET AT TO (LOSS) TO RATIO OF
VALUE, END OF AVERAGE AVERAGE EXPENSES TO
END TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000's) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 9.87 (12.42)% $ 7,203 1.85% (0.18)% 2.28% 31.63%
Year ended October 31, 2003 11.73 20.09% 10,096 1.85% 0.07% 2.34% 68.51%
Year ended October 31, 2004 13.93 19.40% 17,721 1.78% 0.79% 1.88% 106.11%
Year ended October 31, 2005 15.59 18.64% 20,680 1.66% 1.21% 1.66% 31.32%
Year ended October 31, 2006 18.85 31.85% 22,761 1.67% 1.24% 1.67% 33.39%
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 9.56 (13.07)% $ 588 2.60% (0.87)% 3.04% 31.63%
Year ended October 31, 2003 11.34 19.26% 1,076 2.60% (0.62)% 3.16% 68.51%
Year ended October 31, 2004 13.43 18.43% 2,061 2.53% 0.05% 2.63% 106.11%
Year ended October 31, 2005 14.95 17.72% 2,403 2.41% 0.47% 2.41% 31.32%
Year ended October 31, 2006 18.00 30.87% 3,234 2.42% 0.58% 2.42% 33.39%
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 9.68 (13.08)% $ 96 2.60% (1.00)% 3.04% 31.63%
Year ended October 31, 2003 11.54 19.28% 121 2.60% (0.64)% 3.17% 68.51%
Year ended October 31, 2004 13.67 18.46% 137 2.54% (0.10)% 2.66% 106.11%
Year ended October 31, 2005 15.23 17.70% 164 2.41% 0.48% 2.41% 31.32%
Year ended October 31, 2006 18.37 30.92% 163 2.41% 0.58% 2.41% 33.39%
- -------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
SEE NOTES TO FINANCIAL STATEMENTS.
61 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
-------------------------------------- ------------------------
NET
REALIZED
AND
UNREALIZED
GAINS NET
NET ASSET NET (LOSSES) TOTAL REALIZED
VALUE, INVESTMENT FROM FROM GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $11.32 (0.09) (1.96) (2.05) -- --
Year ended October 31, 2003 9.27 (0.06) 3.15 3.09 -- --
Year ended October 31, 2004 12.36 (0.08) 0.79 0.71 -- --
Year ended October 31, 2005 13.07 (0.10) 1.97 1.87 -- --
Year ended October 31, 2006 14.94 (0.09) 2.93 2.84 (0.50) (0.50)
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------
RATIO OF
RATIO OF NET
NET NET EXPENSES INVESTMENT
ASSET ASSETS AT TO (LOSS) TO RATIO OF
VALUE, END OF AVERAGE AVERAGE EXPENSES TO
END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO
PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $ 9.27 (18.11)% $190,686 1.07% (0.87)% 1.07% 103.90%
Year ended October 31, 2003 12.36 33.33 % 326,072 1.01% (0.72)% 1.01% 152.05%
Year ended October 31, 2004 13.07 5.74 % 279,669 0.98% (0.62)% 0.98% 81.75%
Year ended October 31, 2005 14.94 14.31 %(f) 177,519 0.94%(f) (0.54)%(f) 0.94%(f) 63.95%
Year ended October 31, 2006 17.28 19.40 % 192,124 1.03% (0.51)% 1.03% 60.83%
- ---------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Small Cap Equity Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return was 0.04% for the Advisor Shares.
SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS 62
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--VALUE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
-------------------------------------- -------------------------------------
NET REALIZED
AND
UNREALIZED
GAINS NET
NET ASSET NET (LOSSES) REALIZED
VALUE, INVESTMENT FROM TOTAL FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004 (f) $12.68 0.05 0.69 0.74 (0.04) -- (0.04)
Year ended October 31, 2005 13.38 0.10 1.86 1.96 (0.08) (0.13) (0.21)
Year ended October 31, 2006 15.13 0.12 * 2.95 3.07 (0.19) (1.29) (1.48)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004 (f) $12.28 -- 0.68 0.68 (0.01) -- (0.01)
Year ended October 31, 2005 12.95 (0.02) 1.80 1.78 -- (0.13) (0.13)
Year ended October 31, 2006 14.60 (0.00)>* 2.84 2.84 (0.07) (1.29) (1.36)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $12.35 0.01 0.67 0.68 (0.02) -- (0.02)
Year ended October 31, 2005 13.01 (0.02) 1.82 1.80 (0.01) (0.13) (0.14)
Year ended October 31, 2006 14.67 0.00 >* 2.85 2.85 (0.05) (1.29) (1.34)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004 (f) $12.67 0.07 0.70 0.77 (0.06) -- (0.06)
Year ended October 31, 2005 13.38 0.13 1.86 1.99 (0.11) (0.13) (0.24)
Year ended October 31, 2006 15.13 0.15 * 2.94 3.09 (0.23) (1.29) (1.52)
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------
RATIO OF
NET
NET INVESTMENT
NET ASSETS INCOME
ASSET AT END RATIO OF (LOSS) TO RATIO OF
VALUE, OF EXPENSES TO AVERAGE EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET NET AVERAGE NET PORTFOLIO
PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004 (f) $13.38 7.79% $20,933 1.20% 0.81% 1.25% 10.33%
Year ended October 31, 2005 15.13 14.69%(g) 23,315 1.15%(g) 0.64%(g) 1.30%(g) 16.45%
Year ended October 31, 2006 16.72 21.70% 24,688 1.20% 0.74% 1.43% 20.63%
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004 (f) $12.95 9.06% $ 1,938 1.95% 0.05% 2.00% 10.33%
Year ended October 31, 2005 14.60 13.78%(g) 1,767 1.90%(g) (0.10)%(g) 2.04%(g) 16.45%
Year ended October 31, 2006 16.08 20.78% 1,939 1.95% (0.01)% 2.18% 20.63%
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004 (f) $13.01 8.47% $ 399 1.95% 0.04% 2.00% 10.33%
Year ended October 31, 2005 14.67 13.86%(g) 388 1.90%(g) (0.12)%(g) 2.05%(g) 16.45%
Year ended October 31, 2006 16.18 20.72% 157 1.95% 0.01% 2.17% 20.63%
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004 (f) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33%
Year ended October 31, 2005 15.13 14.96%(g) 15,044 0.90%(g) 0.91%(g) 1.02%(g) 16.45%
Year ended October 31, 2006 16.70 21.90% 18,036 0.95% 0.99% 1.18% 20.63%
- ------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Value Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 7, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
63 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006
1. ORGANIZATION:
The HSBC Investor Funds (the "Trust"), a Massachusetts business
trust organized on April 22, 1987, and the HSBC Advisor Funds Trust (the
"Advisor Trust"), a Massachusetts business trust organized on April 5,
1996, are registered under the Investment Company Act of 1940, as amended
(the "Act"), as open-end management investment companies. As of October
31, 2006, the Trust is comprised of 24 separate funds and the Advisor
Trust is comprised of 3 separate funds, each a diversified series of the
HSBC Investor Family of Funds. The accompanying financial statements are
presented for the following 13 funds (individually a "Fund", collectively
the "Funds") of the Trust and Advisor Trust (collectively the "Trusts"):
FUND SHORT NAME TRUST
- ---- ---------- -----
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed
(Advisor) (formerly the HSBC Investor Fixed Income Fund
Income Fund) (Advisor) Advisor Trust
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed
(formerly the HSBC Investor Bond Fund) Income Fund Trust
HSBC Investor High Yield Fixed Income Fund High Yield Fixed
Income Fund Trust
HSBC Investor Intermediate Duration Fixed Intermediate
Income Fund (formerly the HSBC Investor Duration Fixed
Limited Maturity Fund) Income Fund Trust
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free
Bond Fund Trust
HSBC Investor Growth Fund Growth Fund Trust
HSBC Investor Growth and Income Fund Growth and Income
Fund Trust
HSBC Investor International Equity Fund International Equity
Fund Advisor Trust
HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust
HSBC Investor Opportunity Fund Opportunity Fund Trust
HSBC Investor Overseas Equity Fund Overseas Equity
Fund Trust
HSBC Investor Small Cap Equity Fund Small Cap Equity
Fund Advisor Trust
HSBC Investor Value Fund Value Fund Trust
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately. The Core Plus Fixed Income Fund
(Advisor), Core Plus Fixed Income Fund, High Yield Fixed Income Fund,
Intermediate Duration Fixed Income Fund, Growth Fund, International Equity
Fund, Opportunity Fund, Overseas Equity Fund, Small Cap Equity Fund, and
the Value Fund (individually a "Feeder Fund", collectively the "Feeder
Funds") utilize the master feeder fund structure and seek to achieve their
investment objectives by investing all of their investable assets in their
respective Portfolios (as defined below).
HSBC INVESTOR FAMILY OF FUNDS 64
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO OCTOBER 31, 2006
- ---- -------------------- ----------------
Core Plus Fixed Income HSBC Investor Core Plus Fixed Income
Fund (Advisor) Portfolio 72.9%
Core Plus Fixed Income HSBC Investor Core Plus Fixed Income
Fund Portfolio 15.1%
High Yield Fixed Income HSBC Investor High Yield Fixed Income
Fund Portfolio 76.1%
Intermediate Duration HSBC Investor Intermediate Duration Fixed
Fixed Income Fund Income Portfolio 93.5%
Growth Fund HSBC Investor Growth Portfolio 64.9%
International Equity Fund HSBC Investor International Equity Portfolio 84.9%
Opportunity Fund HSBC Investor Small Cap Equity Portfolio 12.3%
Overseas Equity Fund HSBC Investor International Equity Portfolio 7.9%
Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 79.6%
Value Fund HSBC Investor Value Portfolio 66.6%
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately. The HSBC Investor Core Plus Fixed
Income Portfolio (formerly the HSBC Investor Fixed Income Portfolio), HSBC
Investor High Yield Fixed Income Portfolio, HSBC Investor Intermediate
Duration Fixed Income Portfolio (formerly the HSBC Investor Limited
Maturity Portfolio), HSBC Investor Growth Portfolio, HSBC Investor
International Equity Portfolio, HSBC Investor Small Cap Equity Portfolio
and the HSBC Investor Value Portfolio (individually a "Portfolio",
collectively the "Portfolios") are diversified series of the HSBC Investor
Portfolios (the "Portfolio Trust"). The Portfolios operate as master funds
in master-feeder arrangements.
The financial statements of the Portfolios, including the Schedules
of Portfolio Investments, are included elsewhere in this report. The
financial statements of the Portfolios should be read in conjunction with
the financial statements of the Feeder Funds.
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. The High Yield
Fixed Income Fund, Intermediate Duration Fixed Income Fund, New York
Tax-Free Bond Fund, Growth Fund, Growth and Income Fund, and the Value
Fund each offers four classes of shares: Class A Shares, Class B Shares,
Class C Shares and Class I Shares. The Mid-Cap Fund offers four classes of
shares: Class A Shares, Class B Shares, Class C Shares, and Trust Shares.
The Core Plus Fixed Income Fund (Advisor), International Equity Fund, and
the Small Cap Equity Fund each offers one class of shares: Advisor Shares.
The Core Plus Fixed Income Fund, Opportunity Fund, and the Overseas Equity
Fund each offers three classes of shares: Class A Shares, Class B Shares
and Class C Shares. Class A Shares of the Growth Fund, Growth and Income
Fund, Mid-Cap Fund, Opportunity Fund, Overseas Fund and Value Fund have a
maximum sales charge of 5.00% as a percentage of the original purchase
price while Class A Shares of the Core Plus Fixed Income Fund, High Yield
Fixed Income Fund, Intermediate Duration Fixed Income Fund, and New York
Tax-Free Bond Fund have a maximum sales charge of 4.75% as a percentage of
the original purchase price. The Class B Shares of the Funds are offered
without any front-end sales charge but will be subject to a contingent
deferred sales charge ("CDSC") ranging from a maximum of 4.00% if redeemed
less than one year after purchase to 0.00% if redeemed more than four
years after purchase. Class C Shares of the Funds are offered without any
front-end sales charge but will be subject to a maximum CDSC of 1.00% if
redeemed less than one year after purchase. No sales charges are assessed
with respect to Advisor, Trust, Class I or Class Y Shares of the Funds.
Each class of shares in the Funds has identical rights and privileges
except with respect to arrangements pertaining to shareholder servicing or
distribution, class-related expenses, voting rights on matters affecting a
single class of shares, and the exchange privilege of each class of
shares.
Under the Trusts' organizational documents, the Funds' officers and
trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Funds. In addition, in the normal
course of business, the Funds enter into contracts with service providers,
which also provide for indemnifications by the Funds. The Funds' maximum
exposure under these arrangements is unknown, as this would involve any
future claims that may be made against the Funds. However, based on
experience, the Funds expect that risk of loss to be remote.
65 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements.
The policies are in conformity with accounting principles generally
accepted in the United States of America ("GAAP"). The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses for the period.
Actual results could differ from those estimates.
SECURITIES VALUATION:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of
valuations furnished by a pricing service, the use of which has been
approved by the Funds' Board of Trustees. In making such valuations, the
pricing service utilizes both dealer-supplied valuations and the use of
matrix techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
other than market data and without exclusive reliance upon quoted prices
or exchanges or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. All
debt portfolio securities with a remaining maturity of 60 days or less are
valued at amortized cost. Under the amortized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
The value of each equity security is based either on the last sale
price on a national securities exchange, or in the absence of recorded
sales, at the closing bid prices on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities or other assets for which
market quotations are not readily available, or are deemed unreliable due
to a significant event or otherwise, are valued by or at the direction of
the Funds' Board of Trustees. In addition, specific securities may need to
be valued by or at the direction of the Funds' Board of Trustees due to
potentially significant events. Examples of potentially significant events
that could affect the value of an individual security include corporate
actions by the issuer, announcements by the issuer relating to its
earnings or products, regulatory news, natural disasters and litigation.
Examples of potentially significant events that could affect multiple
securities held by a Fund include governmental actions, natural disasters
and armed conflicts.
B. FEEDER FUNDS
The Feeder Funds record their investments in their respective
Portfolios at fair value. Securities of the Portfolios are recorded at
fair value as more fully discussed in the notes to those financial
statements.
SECURITIES TRANSACTIONS AND RELATED INCOME:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
During the fiscal year, security transactions are accounted for no
later than one business day following trade date. For financial reporting
purposes, however, changes in holdings are accounted for on trade date on
the last business day of the reporting period. Securities gains and losses
are calculated on the identified cost basis. Interest income is recognized
on the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date.
B. FEEDER FUNDS
The Feeder Funds record daily their pro-rata income, expenses,
changes in unrealized appreciation and depreciation and realized gains and
losses derived from their respective Portfolios. In addition, the Feeder
Funds accrue their own expenses daily as incurred.
HSBC INVESTOR FAMILY OF FUNDS 66
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
FUTURES CONTRACTS:
The New York Tax-Free Bond Fund, Growth and Income Fund and Mid-Cap
Fund may invest in futures contracts for the purpose of hedging existing
portfolio securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing market interest
rates. Upon entering into a futures contract, a Fund is required to pledge
to the broker an amount of cash and/or other assets equal to a certain
percentage of the contract amount (initial margin deposit). Subsequent
payments, known as "variation margin," are made each day, depending on the
daily fluctuations in the fair value of the underlying security. A gain or
loss equal to the daily variation margin is recognized on a daily basis.
Should market conditions move unexpectedly, a Fund may not achieve
the anticipated benefits of the futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation
in movements in the price of futures contracts, interest rates and the
underlying hedged assets.
OPTIONS:
The Growth and Income Fund and the Mid-Cap Fund may write covered
call options against some of the securities in their portfolios provided
the securities are listed on a national securities exchange. A call option
is "covered" if the Fund owns the underlying securities covered by the
call. The premium received is recorded as a liability and is subsequently
adjusted to the current fair value of the option written. Premiums
received from writing options that expire unexercised are treated on the
expiration date as realized gains from investments. The difference between
the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a
realized gain or loss. If the call option is exercised, the premium is
added to the proceeds from the sale of the underlying security in
determining a realized gain or loss. For the year ended October 31, 2006,
the funds did not write any covered call options.
SECURITIES LOANS:
To generate additional income, the Funds may lend portfolio
securities, in amounts up to 33 1/3% of their respective assets pursuant
to agreements requiring that the loan be collateralized by cash, U.S.
Government or U.S. Government agency securities, equal at all times to at
least 100% of the fair value of the loaned securities. HSBC Bank USA
("HSBC Bank"), an affiliate of the Investment Adviser (defined below),
acted as the securities lending agent for this activity through March 30,
2006. The Funds receive payments from borrowers equivalent to the
dividends and interest that would have been earned on securities loaned
while simultaneously seeking to earn income on the investment of
collateral. Collateral is marked to market daily and adjusted, if needed,
to provide the required level of collateral. There may be risks of delay
in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans
will be made only to borrowers, such as broker-dealers, banks or
institutional borrowers of securities, deemed by HSBC Bank to be of good
standing and creditworthy under guidelines approved by the Board of
Trustees and when, in the judgement of HSBC Bank, the amounts that can be
earned currently from such securities loans justifies the attendant risks.
Loans are subject to termination by the Funds or the borrower at any time
and are, therefore, not considered to be illiquid investments. As of
October 31, 2006, the Funds had no securities on loan.
LINE OF CREDIT:
The New York Tax-Free Bond Fund, Growth and Income Fund and Mid-Cap
Fund participate in a short-term, demand note agreement with HSBC Bank
USA, an affiliate of the Investment Adviser (defined below). Under the
agreement, these Funds may borrow up to $50 million. The purpose of the
agreement is to meet temporary or emergency cash needs, including
redemption requests that might otherwise require the untimely disposition
of securities.
During the year ended October 31, 2006, the details of the borrowing
were as follows (based on the actual number of days in which the
respective Fund borrowed monies):
67 HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
AVERAGE AVERAGE
AMOUNT INTEREST
FUND OUTSTANDING RATE
---- ----------- --------
Growth and Income Fund ..................... $ 675,204 4.65%
Mid-Cap Fund ............................... 1,546,571 5.13%
ALLOCATIONS:
Expenses directly attributable to a Fund are charged to that Fund.
Expenses not directly attributable to a Fund are allocated proportionately
among various or all Funds within the HSBC Investor Family of Funds in
relation to the net assets of each Fund or on another reasonable basis.
Expenses specific to a class are charged to that class. In addition,
income, expenses (other than class specific expenses), and
unrealized/realized gains and losses are allocated to each class based on
relative net assets on a daily basis.
DIVIDENDS TO SHAREHOLDERS:
The Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income
Fund, High Yield Fixed Income, Intermediate Duration Fixed Income Fund,
and the New York Tax-Free Bond Fund declare all net investment income
daily as dividends to their shareholders and distribute such dividends
monthly. Dividends from net investment income, if any, are declared and
distributed semi-annually in the case of the Growth Fund, Growth and
Income Fund, Opportunity Fund, Small Cap Equity Fund, and the Value Fund,
and annually in the case of the International Equity Fund, Mid-Cap Fund,
and Overseas Fund.
The Funds' net realized gains, if any, are distributed to
shareholders at least annually. Additional distributions are also made to
the Funds' shareholders to the extent necessary to avoid the federal
excise tax on certain undistributed income and net capital gains of
regulated investment companies.
The amount and character of net investment income and net realized
gains distributions are determined in accordance with federal income tax
regulations which may differ from GAAP. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature (e.g., reclassification of market
discounts, certain gain/loss, paydowns, and certain distributions), such
amounts are reclassified within the components of net assets; temporary
differences (e.g., wash losses and post-october loss deferrals) do not
require reclassification. The Funds may utilize equalization accounting
for tax purposes and designate earnings and profits, including net
realized gains distributed to shareholders on redemption of shares, as a
part of the dividends paid deduction for income tax purposes.
REDEMPTION FEE:
A redemption fee of 2.00% is charged and recorded as paid-in-capital
for any shares redeemed or exchanged after holding them for less than 30
days. This fee does not apply to shares purchased through reinvested
dividends or capital gains or shares held in certain omnibus accounts or
retirement plans that cannot implement the fee. For the year ended October
31, 2006, the following Funds collected redemption fees as follows:
HSBC INVESTOR FAMILY OF FUNDS 68
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
FUND FEES COLLECTED
---- ---------------
Core Plus Fixed Income Fund (Advisor) ............ $ 164
Core Plus Fixed Income Fund ...................... $ 684
High Yield Fixed Income Fund ..................... $1,869
Intermediate Duration Fixed Income Fund .......... $ 7
New York Tax-Free Bond Fund ...................... $ 493
Growth Fund ...................................... $ 896
Growth and Income Fund ........................... $ 2
International Equity Fund ........................ $ 808
Mid-Cap Fund ..................................... $ 10
Opportunity Fund ................................. $ 540
Overseas Equity Fund ............................. $ 548
Small Cap Equity Fund ............................ $ 469
Value Fund ....................................... $ 613
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal income tax
purposes. Each Fund has qualified and intends to continue to qualify each
year as a "regulated investment company" under Subchapter M of the
Internal Revenue Code, as amended and to distribute substantially all of
their taxable net investment income and net realized gains, if any, to
their shareholders. Accordingly, no provision for federal income or excise
tax is required.
NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006 the Financial Accounting Standards Board (FASB)
issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair
Value Measurements." This standard establishes a single authoritative
definition of fair value sets out a framework for measuring fair value and
requires additional disclosures about fair value measurements. SFAS No.
157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The changes to current GAAP from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about
fair value measurements. As of October 31, 2006, the Funds do not believe
the adoption of SFAS No. 157 will impact the financial statement amounts,
however, additional disclosures will be required about the inputs used to
develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.
On July 13, 2006, the FASB released FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax return to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more likely-than-not threshold would
be recorded as a tax benefit or expense in the year of determination.
Adoption of FIN 48 is required for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the effective
date. Management is in the process of completing their analysis on whether
the adoption of FIN 48 will have an impact to the financial statements
upon adoption.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as Investment Adviser to the New York Tax-Free Bond Fund, Growth and
Income Fund, and the Mid-Cap Fund. As Investment Adviser, HSBC manages the
investments of the Funds and continuously reviews, supervises and
administers the Funds' investments. Sub-Investment Adviser services
69 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
are provided by Transamerica Investment Management, LLC ("Transamerica")
and Munder Capital Management ("Munder") for the Growth and Income Fund
and Mid-Cap Fund, respectively.
For its services as Investment Adviser, HSBC is entitled to receive
a fee, accrued daily and paid monthly, at an annual rate of 0.25% of the
average daily net assets of the New York Tax-Free Bond Fund.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Transamerica receive, in the aggregate, a fee
accrued daily and paid monthly at an annual rate of 0.60% of the Growth
and Income Fund's average daily net assets.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Munder receive, in the aggregate, a fee accrued
daily and paid monthly at an annual rate of 0.75% of the Mid-Cap Fund's
average daily net assets.
Feeder Funds are not directly charged any investment management
fees.
ADMINISTRATION:
HSBC serves the Funds as Administrator. Under the terms of the
administration agreement, HSBC receives from the Funds a fee, accrued
daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
--------------------------------- --------
Up to $8 billion .............................................................. 0.075%
In excess of $8 billion but not exceeding $9.25 billion ....................... 0.070%
In excess of $9.25 billion but not exceeding $12 billion ...................... 0.050%
In excess of $12 billion ...................................................... 0.030%
The fee breakpoints are determined on the basis of the aggregate
average daily net assets of the HSBC Investor Family of Funds. The fee is
allocated to each series of the HSBC Investor Family of Funds based upon
its pro-rata share of net assets for each class. For assets invested in
the underlying Portfolios by the Feeder Funds, the Portfolios pay half of
the administration fee and the Feeder Funds pay half, for a combination of
the total fee rate above.
The administration fees accrued for each class by fund, of which 50%
of such fees are deemed to be class specific since June 1, 2006 (100% was
deemed class specific prior to that date), are as follows:
INTERMEDIATE
CORE PLUS DURATION
FIXED INCOME CORE PLUS HIGH YIELD FIXED NEW YORK
FUND FIXED INCOME FIXED INCOME TAX-FREE GROWTH GROWTH AND
(ADVISOR) FUND INCOME FUND FUND BOND FUND FUND INCOME FUND
------------- ------------ ----------- ------------ --------- ------- -----------
Class A .................... $ -- $ 4,836 $ 1,570 $ 377 $ 24,934 $ 8,335 $ 1,021
Class B .................... -- 1,961 476 1,605 11,331 527 3,371
Class C .................... -- 94 49 191 1,098 124 44
Advisor .................... 30,499 -- -- -- -- -- --
Class I .................... -- -- 876 5,957 11,784 5,486 31,026
------------- ------------ ----------- ------------ --------- ------- -----------
Total ................... $ 30,499 $ 6,891 $ 2,971 $ 8,130 $ 49,147 $14,472 $ 35,462
============= ============ =========== ============ ========= ======= ===========
INTERNATIONAL MID-CAP OPPORTUNITY OVERSEAS SMALL CAP VALUE
EQUITY FUND FUND FUND EQUITY FUND EQUITY FUND FUND
------------- ------- ----------- ----------- ----------- -------
Class A ..................................... $ -- $ 1,864 $ 9,051 $ 8,175 $ -- $ 8,957
Class B ..................................... -- 5,772 1,814 1,096 -- 696
Class C ..................................... -- 88 123 70 -- 109
Advisor ..................................... 89,784 -- -- -- 70,230 --
Class I ..................................... -- -- -- -- -- 6,062
Trust ....................................... -- 13,609 -- -- -- --
------------- ------- ----------- ----------- ----------- -------
Total .................................... $ 89,784 $21,333 $ 10,988 $ 9,341 $ 70,230 $15,824
============= ======= =========== =========== =========== =======
Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund
Services Ohio, Inc. ("BISYS Ohio"), a wholly-owned subsidiary of The BISYS
Group, Inc, serves as sub-administrator to each Fund subject to the
general
HSBC INVESTOR FAMILY OF FUNDS 70
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
supervision of the Funds' Board of Trustees and HSBC. For these services,
BISYS Ohio is entitled to a fee, payable by HSBC, at an annual rate
equivalent to the fee rates set forth above, minus 0.02% (2 basis points)
which is retained by HSBC.
Under a Compliance Services Agreement between the Funds' and BISYS
Ohio (the "CCO Agreement"), BISYS Ohio makes an employee available to
serve as the Funds' Chief Compliance Officer (the "CCO"). Under the CCO
Agreement, BISYS Ohio also provides infrastructure and support in
implementing the written policies and procedures comprising the Funds'
compliance program, including support services to the CCO. For the
services provided under the CCO Agreement, the HSBC Investor Family of
Funds paid BISYS Ohio $240,000 for the year ended October 31, 2006, plus
reimbursement of certain expenses. Expenses incurred by each Fund are
reflected on the Statements of Operations as "Compliance service". BISYS
Ohio pays the salary and other compensation earned by any such individuals
as employees of BISYS Ohio.
DISTRIBUTION PLAN:
BISYS Fund Services Limited Partnership ("BISYS"), a wholly-owned
subsidiary of BISYS Fund Services, Inc., serves the Funds as Distributor
(the "Distributor"). The Trusts have adopted a non-compensatory
Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 of the
Act. The Plan provides for reimbursement of expenses incurred by the
Distributor related to distribution and marketing, at a rate not to exceed
0.25%, 1.00% and 1.00% of the average daily net assets of Class A Shares
(currently not being charged), Class B Shares (currently charging 0.75%)
and Class C Shares (currently charging 0.75%) of the Funds, respectively.
BISYS, as Distributor, also received $1,248,150, $797,394 and $18,602 in
commissions from sales of HSBC Investor Family of Funds, for Class A
Shares, Class B Shares and Class C Shares, respectively of which
$1,247,785, $797,194 and $18,602, was reallowed to HSBC affiliated brokers
and dealers, for Class A Shares, Class B Shares and Class C Shares,
respectively.
SHAREHOLDER SERVICING:
The Trusts have adopted an Administrative Services Plan which
provides for payments to shareholder servicing agents (which currently
consists of HSBC and its affiliates) for providing various shareholder
services. For performing these services, the shareholder servicing agents
receive a fee up to 0.25%, 0.25%, and 0.25% that is computed daily and
paid monthly equal to a percentage of average daily net assets of Class A
Shares, Class B Shares and Class C Shares of the Funds, respectively. The
aggregate fees paid to the Distributor pursuant to the Distribution Plan
and to shareholder servicing agents pursuant to the Administrative
Services Plan currently are not intended to exceed 0.25% of the average
daily net assets of Class A Shares, and 1.00% of the average daily net
assets of Class B Shares and Class C Shares.
FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE:
BISYS Ohio provides fund accounting and transfer agency services for
each Fund. In addition, HSBC serves as custodian for the New York Tax-Free
Bond Fund, Mid-Cap Fund and Growth and Income Fund. As transfer agent for
the Funds, BISYS receives a fee based on the number of Funds and
shareholder accounts, subject to certain minimums and reimbursement of
certain expenses. As fund accountant for the Funds, BISYS receives an
annual fee per Fund and share class, subject to certain minimums and
reimbursement of certain expenses. As custodian for the Funds, HSBC Bank
receives a fee based on average daily net assets, number of transactions
and reimbursement of certain expenses. Compensation to HSBC for services
to the Funds as custodian is presented in the Statement of Operations as
custodian fees.
Effective May 18, 2006 each of the six non-interested Trustees are
compensated with a $35,000 annual Board retainer, as well as a $3,000
annual retainer for each Committee of the Board. Each non-interested
Trustee also receives a $5,000 and $3,000 meeting fee for each regular
in-person Board meeting and Committee meeting, respectively. Furthermore,
each non-interested Trustee receives compensation for attending special
meetings and/or functioning as a Committee Chairperson or Lead Trustee. In
addition, the non-interested Trustees are reimbursed for certain expenses
incurred in connection with their Board membership.
71 HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
Prior to May 18, 2006 each of the six non-interested Trustees were
compensated with a $24,000 annual Board retainer, as well as a $1,000
annual retainer for each Committee of the Board. Each non-interested
Trustee also received a $4,000 and $2,000 meeting fee for each regular
in-person Board meeting and Committee meeting, respectively.
FEE REDUCTIONS:
The Investment Adviser has agreed to contractually waive 0.05% of
its management fee, computed daily and paid monthly, and based on the
average daily net assets of the Growth and Income Fund and the Mid-Cap
Fund.
The Investment Adviser has also agreed to contractually limit,
through March 1, 2007, the total expenses, exclusive of interest, taxes,
brokerage commissions and extraordinary expenses, of certain Funds. Each
affected Fund Class has its own expense limitations based on the average
daily net assets for any full fiscal year as follows:
CONTRACTUAL
PRE 2/28/06 CURRENT
EXPENSE EXPENSE
FUND CLASS LIMITATION LIMITATION
---- ------- ----------- -----------
Core Plus Fixed Income Fund ..................... A 1.10% 0.70%
Core Plus Fixed Income Fund ..................... B 1.85% 1.45%
Core Plus Fixed Income Fund ..................... C 1.85% 1.45%
Core Plus Fixed Income Fund (Advisor) ........... Advisor N/A 0.45%
High Yield Fixed Income Fund .................... A 0.80% 0.80%
High Yield Fixed Income Fund .................... B 1.55% 1.55%
High Yield Fixed Income Fund .................... C 1.55% 1.55%
High Yield Fixed Income Fund .................... I 0.55% 0.55%
Intermediate Duration Fixed Income Fund ......... A N/A 0.65%
Intermediate Duration Fixed Income Fund ......... B N/A 1.40%
Intermediate Duration Fixed Income Fund ......... C N/A 1.40%
Intermediate Duration Fixed Income Fund ......... I N/A 0.40%
Growth Fund ..................................... A 1.20% 1.20%
Growth Fund ..................................... B 1.95% 1.95%
Growth Fund ..................................... C 1.95% 1.95%
Growth Fund ..................................... I 0.95% 0.95%
Growth and Income Fund .......................... A N/A 1.20%
Growth and Income Fund .......................... B N/A 1.95%
Growth and Income Fund .......................... C N/A 1.95%
Growth and Income Fund .......................... I N/A 0.95%
Mid-Cap Fund .................................... A N/A 1.35%
Mid-Cap Fund .................................... B N/A 2.10%
Mid-Cap Fund .................................... C N/A 2.10%
Mid-Cap Fund .................................... Trust N/A 1.10%
Opportunity Fund ................................ A 1.65% 1.65%
Opportunity Fund ................................ B 2.40% 2.40%
Opportunity Fund ................................ C 2.40% 2.40%
Overseas Equity Fund ............................ A 1.85% 1.85%
Overseas Equity Fund ............................ B 2.60% 2.60%
Overseas Equity Fund ............................ C 2.60% 2.60%
Value Fund ...................................... A 1.20% 1.20%
Value Fund ...................................... B 1.95% 1.95%
Value Fund ...................................... C 1.95% 1.95%
Value Fund ...................................... I 0.95% 0.95%
The Administrator and BISYS Ohio may voluntarily waive/reimburse
fees to help support the expense limits of the Funds. In addition, the
Investment Adviser may waive/reimburse additional fees at their
discretion. Amounts waived/reimbursed by the Investment Adviser,
Administrator and BISYS Ohio are reported separately on the
HSBC INVESTOR FAMILY OF FUNDS 72
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
Statements of Operations. All contractual and any voluntary fee
waivers/reimbursements are not subject to recoupment in subsequent fiscal
periods. Voluntary waivers/reimbursements may be stopped at any time.
OTHER:
For its services as securities lending agent, HSBC Bank (see note
2--Security Loans), received a fee equal to 0.06% of the average dollar
value of the loans outstanding from the Funds. Income from securities
lending, net of related expenses, is recorded as earned by the Funds. The
fees collected by HSBC Bank for the year ended October 31, 2006 were:
FUND FEE
---- -----
Growth and Income Fund ................... $ 94
Mid-Cap Fund ............................. 398
The HSBC Investor Family of Funds may use affiliated broker/dealers
for the execution of portfolio investment trades. For the year ended
October 31, 2006, affiliated broker/dealers received $31 in commissions on
the execution of trades related to the HSBC Investor Family of Funds.
4. INVESTMENT TRANSACTIONS:
Purchases of and proceeds from sales, excluding short-term
securities, for the Funds for the year ended October 31, 2006 totaled:
FUND PURCHASES SALES
---- ------------- ------------
New York Tax-Free Bond Fund .............. $ 7,974,526 $ 12,440,659
Growth and Income Fund ................... 16,447,903 31,209,681
Mid-Cap Fund ............................. 15,042,782 20,323,957
There were no long-term U.S. Government securities held during the
year ended October 31, 2006.
Contributions and withdrawals of the respective Portfolios for the
year ended October 31, 2006 totaled:
FUND CONTRIBUTIONS WITHDRAWALS
---- ------------- ------------
Core Plus Fixed Income Fund (Advisor) .... $ 13,174,524 $ 26,441,644
Core Plus Fixed Income Fund .............. 1,294,485 9,649,269
High Yield Fixed Income Fund ............. 10,083,096 1,009,129
Intermediate Duration Fixed Income Fund .. 836,649 14,891,228
Growth Fund .............................. 5,430,793 5,947,158
International Equity Fund ................ 49,518,732 24,194,191
Opportunity Fund ......................... 3,684,560 6,990,010
Overseas Equity Fund ..................... 3,947,831 7,984,486
Small Cap Equity Fund .................... 10,428,101 29,180,838
Value Fund ............................... 4,373,863 8,465,831
5. CONCENTRATION OF CREDIT RISK:
The New York Tax-Free Bond Fund invests primarily in debt
obligations issued by the State of New York and its respective political
subdivisions, agencies and public authorities. The Fund is more
susceptible to economic and political factors adversely affecting issuers
of New York specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
6. LEGAL AND REGULATORY MATTERS:
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an
affiliate of BISYS Fund Services Ohio, Inc. which provides various
services to the Funds as described in footnote 3, reached a settlement
with the Securities and Exchange Commission ("SEC") regarding the SEC's
investigation related to BISYS' past payment of certain marketing and
other expenses with respect to certain of its mutual fund clients.
Although BISYS has reached a settlement with the
73 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
SEC, the Funds' management is not aware that any determination has been
made as to how the BISYS settlement monies will be distributed. The SEC's
examination of BISYS' mutual fund clients and their advisers, including
HSBC, has not been completed. While the Funds' management is currently
unable to determine the impact, if any, of such matters on the Funds or
the Funds' financial statements, management does not anticipate a
material, adverse impact to the Funds or the Funds' financial statements.
7. FEDERAL INCOME TAX INFORMATION:
At October 31, 2006, the cost, unrealized appreciation and
unrealized depreciation of securities, for federal income tax purposes,
were as follows:
GROSS GROSS NET UNREALIZED
TAX UNREALIZED TAX UNREALIZED APPRECIATION
PORTFOLIO NAME TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------- ------------ -------------- ------------- --------------
New York Tax-Free Bond Fund ..... $ 58,085,438 $ 2,508,349 $ (21,520) $ 2,486,829
Growth and Income Fund .......... 36,955,600 10,158,966 (380,074) 9,778,892
Mid-Cap Fund .................... 21,790,933 5,791,771 (12,416) 5,779,355
The tax characteristics of dividends paid by the Funds during the
fiscal year ended October 31, 2006 were as follows:
DIVIDENDS PAID FROM
---------------------------
ORDINARY NET LONG TERM TOTAL TAXABLE TAX EXEMPT TOTAL DIVIDENDS
FUND INCOME CAPITAL GAINS DIVIDENDS DISTRIBUTIONS PAID(1)
---- ----------- ------------- ------------- ------------- ---------------
Core Plus Fixed Income
Fund (Advisor) .......... $ 5,304,945 $ 2,329,061 $ 7,634,006 $ -- $ 7,634,006
Core Plus Fixed Income
Fund .................... 922,409 -- 922,409 -- 922,409
High Yield Fixed Income
Fund .................... 508,987 -- 508,987 -- 508,987
Intermediate Duration
Fixed Income Fund ....... 973,678 -- 973,678 -- 973,678
New York Tax-Free Bond
Fund .................... 4,399 100,731 105,130 2,003,584 2,108,714
Growth Fund ................ -- 604,764 604,764 -- 604,764
Growth and Income Fund ..... 25,548 -- 25,548 -- 25,548
International Equity Fund .. 4,030,977 6,656,885 10,687,862 -- 10,687,862
Mid-Cap Fund ............... -- 6,447,215 6,447,215 -- 6,447,215
Opportunity Fund ........... -- 872,331 872,331 -- 872,331
Overseas Equity Fund ....... 754,636 1,303,263 2,057,899 -- 2,057,899
Small Cap Equity Fund ...... -- 5,803,618 5,803,618 -- 5,803,618
Value Fund ................. 523,785 3,327,270 3,851,055 -- 3,851,055
The tax characteristics of dividends paid by the Funds during the
fiscal year ended October 31, 2005 were as follows:
HSBC INVESTOR FAMILY OF FUNDS 74
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
DIVIDENDS PAID FROM
---------------------------
ORDINARY NET LONG TERM TOTAL TAXABLE TAX EXEMPT TOTAL DIVIDENDS
FUND INCOME CAPITAL GAINS DIVIDENDS DISTRIBUTIONS PAID(1)
---- ----------- ------------- ------------- ------------- ---------------
Core Plus Fixed Income
Fund (Advisor) .......... $ 4,616,716 $ -- $ 4,616,716 $ -- $ 4,616,716
Core Plus Fixed Income
Fund .................... 959,222 -- 959,222 -- 959,222
Intermediate Duration
Fixed Income Fund ....... 1,354,679 201,978 1,556,657 -- 1,556,657
New York Tax-Free Bond
Fund .................... 3,990 113,912 117,902 2,040,705 2,158,607
Growth Fund ................ 133,116 59,000 192,116 -- 192,116
Growth and Income Fund ..... 2,505,469 -- 2,505,469 -- 2,505,469
International Equity Fund .. 2,396,450 -- 2,396,450 -- 2,396,450
Overseas Equity Fund ....... 1,082,546 199,434 1,281,980 -- 1,281,980
Value Fund ................. 542,918 256,645 799,563 -- 799,563
As of October 31, 2006, the components of accumulated
earnings/(deficit) on a tax basis for the Funds were as follows:
UNDISTRIBUTED
UNDISTRIBUTED LONG ACCUMULATED TOTAL
UNDISTRIBUTED TAX TERM CAPITAL AND UNREALIZED ACCUMULATED
ORDINARY EXEMPT CAPITAL ACCUMULATED DIVIDENDS OTHER APPRECIATION/ EARNINGS/
FUND INCOME INCOME GAINS EARNINGS PAYABLE(2) LOSSES DEPRECIATION(3) (DEFICIT)
---- ------------- ------------- ------------- ----------- ----------- ----------- --------------- ------------
Core Plus Fixed
Income Fund
(Advisor) .... $ 388,161 $ -- $ -- $ 388,161 $ (358,525) $(1,470,345) $ 571,618 $ (869,091)
Core Plus Fixed
Income Fund .. 73,067 -- -- 73,067 (67,947) (977,088) 115,737 (856,231)
High Yield Fixed
Income Fund .. 98,326 -- -- 98,326 (60,388) -- 69,732 107,670
Intermediate
Duration Fixed
Income Fund .. 84,936 -- -- 84,936 (77,865) (723,084) 84,354 (631,659)
New York Tax-Free
Bond Fund .... 12,628 157,955 9,094 179,677 (163,344) -- 2,486,829 2,503,162
Growth Fund ..... -- -- 2,996,693 2,996,693 -- -- 3,934,358 6,931,051
Growth and
Income Fund .. -- -- -- -- -- (10,042,340) 9,778,892 (263,448)
International
Equity Fund .. 8,126,375 -- 22,931,569 31,057,944 -- -- 61,019,398 92,077,342
Mid-Cap Fund .... 647,121 -- 1,300,752 1,947,873 -- -- 5,779,355 7,727,228
Opportunity
Fund ......... 75,818 -- 3,560,218 3,636,036 -- -- 4,475,824 8,111,860
Overseas Equity
Fund ......... 667,589 -- 2,786,165 3,453,754 -- -- 7,018,458 10,472,212
Small Cap
Equity Fund .. 3,149,480 -- 26,789,336 29,938,816 -- -- 31,845,588 61,784,404
Value Fund ...... 315,357 -- 4,064,790 4,380,147 -- -- 9,352,763 13,732,910
- ----------
(1) Total dividends paid may differ from the amount reported in the Statement
of Changes in Net Assets because dividends are recognized when actually
paid for tax purposes.
(2) Dividends payable may differ from the amount reported in the Statements of
Assets and Liabilities because dividends reinvested on October 31, 2006
are booked as capital for financial reporting purposes but are reflected
as a payable for tax purposes.
(3) The differences between book-basis and tax-basis unrealized
appreciation/deprecation are attributable primarily to: tax deferral of
losses on wash sales, the realization for tax purposes of unrealized
gains/losses on certain derivative instruments, the difference between
book and tax amortization methods for premium and market discount, the
realization for tax purposes of unrealized gains/losses on investments in
passive foreign investment companies, and the return of capital
adjustments from real estate investment trusts.
As of October 31, 2006, the following Funds have net capital loss
carryforwards, which are available to offset future realized gains.
75 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
FUND AMOUNT EXPIRES
---- ----------- -------
Core Plus Fixed Income Fund (Advisor) ...... $ 1,470,345 2014
Core Plus Fixed Income Fund ................ 28,334 2008
185,518 2010
182,320 2011
208,391 2012
372,525 2014
Intermediate Duration Fixed Income Fund .... 288,779 2013
434,305 2014
Growth and Income Fund ..................... 445,319 2010
9,597,021 2011
HSBC INVESTOR FAMILY OF FUNDS 76
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and
Board of Trustees of
HSBC Investor Funds
HSBC Investor Advisor Funds Trust:
We have audited the accompanying statements of assets and liabilities of
HSBC Investor Core Plus Fixed Income Fund (Advisor), HSBC Investor Core Plus
Fixed Income Fund, HSBC Investor High Yield Fixed Income Fund, HSBC Investor
Intermediate Duration Fixed Income Fund, HSBC Investor New York Tax-Free Bond
Fund, HSBC Investor Growth Fund, HSBC Investor Growth and Income Fund, HSBC
Investor International Equity Fund, HSBC Investor Mid-Cap Fund, HSBC Investor
Opportunity Fund, HSBC Investor Overseas Equity Fund, HSBC Investor Small Cap
Equity Fund and HSBC Investor Value Fund (the Funds), including the schedules of
portfolio investments of HSBC Investor New York Tax-Free Bond Fund, HSBC
Investor Growth and Income Fund and HSBC Investor Mid-Cap Fund, as of October
31, 2006, and the related statements of operations for the year or period then
ended, the statements of changes in net assets for each period in the two-year
period then ended and the financial highlights for each period in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2006, by correspondence with
the custodians and brokers; or other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2006, and the results of their operations for the year
or period then ended, the changes in their net assets for each period in the
two-year period then ended, and the financial highlights for each period in the
five-year period then ended, in conformity with U.S. generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
December 22, 2006
77 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended October 31, 2006, the following percentage of the
total ordinary income dividends paid by the Funds qualify for the
corporate dividends received deduction available to corporate
shareholders.
DIVIDENDS
RECEIVED
FUND DEDUCTION
---- ---------
Value Fund ............................................. 100%
The International Equity Fund and the Overseas Equity Fund intend to
elect to pass through to shareholders the income tax credit for taxes paid
to foreign countries. Foreign source income and foreign tax expense per
outstanding share on October 31, 2006 are as follows:
FOREIGN SOURCE FOREIGN TAX
FUND INCOME EXPENSE
---- -------------- -----------
International Equity Fund ............. $0.53 $0.04
Overseas Equity Fund .................. $0.50 0.04
The pass-through of the foreign tax credit will only affect those
persons who are shareholders on the dividend record date in December 2006.
These shareholders will receive more detailed information along with their
2006 Form 1099-DIV.
For the year ended October 31, 2006, dividends paid by the Funds may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Growth Tax Relief Reconciliation Act of 2003. The Funds intend to
designate the maximum amount allowable as taxed at a maximum rate of 15%.
Complete information will be reported in conjunction with your 2006 Form
1099-DIV.
QUALIFIED
DIVIDEND
FUND INCOME
---- ---------
International Equity Fund ............................. 96%
Overseas Equity Fund .................................. 81%
Value Fund ............................................ 100%
The New York Tax-Free Bond Fund designated 96.0% of its income
dividends as exempt-interest dividends for the year ended October 31,
2006.
During the year ended October 31, 2006, the following Funds declared
tax-exempt income distributions:
AMOUNT
----------
New York Tax-Free Bond Fund ........................ $2,003,584
During the year ended October 31, 2006, the following Funds declared net
long term capital gain distributions:
AMOUNT
----------
Core Plus Fixed Income Fund (Advisor) .............. $2,329,061
New York Tax-Free Bond Fund ........................ 100,731
Growth Fund ........................................ 604,764
International Equity Fund .......................... 6,656,885
Mid-Cap Fund ....................................... 6,447,215
Opportunity Fund ................................... 872,331
Overseas Equity Fund ............................... 1,303,263
Small Cap Equity Fund .............................. 5,803,618
Value Fund ......................................... 3,327,270
HSBC INVESTOR FAMILY OF FUNDS 78
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on
purchases; redemption fees; and exchange fees; and (2) ongoing costs,
including management fees; distribution and shareholder servicing fees;
and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the HSBC
Investor Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from May 1, 2006
through October 31, 2006.
ACTUAL EXPENSES
The table on the following page provides information about actual
account values and actual expenses. You may use the information below,
together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply
the result by the number in the table under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account
during this period.
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Core Plus Fixed Income
Fund (Advisor) Advisor Shares $1,000.00 $1,046.40 $ 2.32 0.45%
Core Plus Fixed Income Fund Class A 1,000.00 1,045.80 3.61 0.70%
Class B 1,000.00 1,041.90 7.46 1.45%
Class C 1,000.00 1,042.90 7.47 1.45%
High Yield Fixed Income Fund Class A 1,000.00 1,031.20 4.10 0.80%
Class I 1,000.00 1,033.50 2.82 0.55%
Class B 1,000.00 1,027.30 7.92 1.55%
Class C 1,000.00 1,027.20 7.92 1.55%
Intermediate Duration
Fixed Income Fund Class A 1,000.00 1,044.60 3.35 0.65%
Class I 1,000.00 1,045.80 2.06 0.40%
Class B 1,000.00 1,039.50 7.20 1.40%
Class C 1,000.00 1,040.60 7.20 1.40%
New York Tax-Free Bond Fund Class A 1,000.00 1,035.60 4.82 0.94%
Class I 1,000.00 1,035.90 3.49 0.68%
Class B 1,000.00 1,031.70 8.65 1.69%
Class C 1,000.00 1,031.60 8.65 1.69%
Growth Fund Class A 1,000.00 989.30 6.02 1.20%
Class I 1,000.00 990.70 4.77 0.95%
Class B 1,000.00 986.10 9.76 1.95%
Class C 1,000.00 985.50 9.76 1.95%
Growth & Income Fund Class A 1,000.00 1,003.70 6.06 1.20%
Class I 1,000.00 1,004.60 4.80 0.95%
Class B 1,000.00 1,000.00 9.83 1.95%
Class C 1,000.00 1,000.00 9.83 1.95%
International Equity Fund Advisor Shares 1,000.00 1,036.60 5.03 0.98%
Mid-Cap Fund Class A 1,000.00 982.30 6.75 1.35%
Trust Shares 1,000.00 983.70 5.50 1.10%
Class B 1,000.00 977.80 10.47 2.10%
Class C 1,000.00 979.10 10.48 2.10%
Opportunity Fund Class A 1,000.00 984.20 7.75 1.55%
Class B 1,000.00 980.00 11.48 2.30%
Class C 1,000.00 980.20 11.48 2.30%
Overseas Fund Class A 1,000.00 1,032.30 8.66 1.69%
Class B 1,000.00 1,028.60 12.48 2.44%
Class C 1,000.00 1,028.60 12.48 2.44%
79 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006 (CONTINUED)
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Small Cap Equity Fund Advisor Shares 1,000.00 986.90 5.16 1.03%
Value Fund Class A 1,000.00 1,073.10 6.27 1.20%
Class I 1,000.00 1,073.80 4.97 0.95%
Class B 1,000.00 1,069.30 10.17 1.95%
Class C 1,000.00 1,068.70 10.17 1.95%
- ----------
* Expenses are equal to the average account value times the Fund's annualized
expense ratio multiplied by the number of days in the most recent fiscal
half-year divided by the number of days in the fiscal year.
HSBC INVESTOR FAMILY OF FUNDS 80
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account
values and hypothetical expenses based on each HSBC Investor Funds's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges (loads), redemption fees, or exchange fees.
Therefore, the table is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would
have been higher.
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Core Plus Fixed Income
Fund (Advisor) Advisor Shares $1,000.00 $1,022.94 $ 2.29 0.45%
Core Plus Fixed Income
Fund Class A 1,000.00 1,021.68 3.57 0.70%
Class B 1,000.00 1,017.90 7.37 1.45%
Class C 1,000.00 1,017.90 7.37 1.45%
High Yield Fixed Income Fund Class A 1,000.00 1,020.77 4.08 0.80%
Class I 1,000.00 1,022.13 2.80 0.55%
Class B 1,000.00 1,016.38 7.88 1.55%
Class C 1,000.00 1,015.02 7.88 1.55%
Intermediate Duration
Fixed Income Fund Class A 1,000.00 1,021.93 3.31 0.65%
Class I 1,000.00 1,023.19 2.04 0.40%
Class B 1,000.00 1,018.15 7.12 1.40%
Class C 1,000.00 1,018.15 7.12 1.40%
New York Tax-Free Bond Fund Class A 1,000.00 1,020.47 4.79 0.94%
Class I 1,000.00 1,021.78 3.47 0.68%
Class B 1,000.00 1,016.69 8.59 1.69%
Class C 1,000.00 1,016.69 8.59 1.69%
Growth Fund Class A 1,000.00 1,019.16 6.11 1.20%
Class I 1,000.00 1,020.42 4.84 0.95%
Class B 1,000.00 1,015.38 9.91 1.95%
Class C 1,000.00 1,015.38 9.91 1.95%
Growth & Income Fund Class A 1,000.00 1,019.16 6.11 1.20%
Class I 1,000.00 1,020.42 4.84 0.95%
Class B 1,000.00 1,015.38 9.91 1.95%
Class C 1,000.00 1,015.38 9.91 1.95%
International Equity Fund Advisor Shares 1,000.00 1,020.27 4.99 0.98%
Mid-Cap Fund Class A 1,000.00 1,018.40 6.87 1.35%
Trust Shares 1,000.00 1,019.66 5.60 1.10%
Class B 1,000.00 1,014.62 10.66 2.10%
Class C 1,000.00 1,014.62 10.66 2.10%
Opportunity Fund Class A 1,000.00 1,017.39 7.88 1.55%
Class B 1,000.00 1,013.61 11.67 2.30%
Class C 1,000.00 1,013.61 11.67 2.30%
81 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006 (CONTINUED)
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Overseas Fund Class A 1,000.00 1,016.69 8.59 1.69%
Class B 1,000.00 1,012.91 12.38 2.44%
Class C 1,000.00 1,012.91 12.38 2.44%
Small Cap Equity Fund Advisor Shares 1,000.00 1,020.01 5.24 1.03%
Value Fund Class A 1,000.00 1,019.16 6.11 1.20%
Class I 1,000.00 1,020.42 4.84 0.95%
Class B 1,000.00 1,015.38 9.91 1.95%
Class C 1,000.00 1,015.38 9.91 1.95%
- ----------
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
HSBC INVESTOR FAMILY OF FUNDS 82
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 44.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
FEDERAL HOME LOAN MORTGAGE CORP. - 4.3%
Pool #1B2655, 4.14%, 12/1/34 (a) ................... 1,559,661 1,545,870
Pool #1J1313, 6.58%, 6/1/36 ........................ 2,055,189 2,085,555
Pool #C00368, 8.50%, 10/1/24 ....................... 33,810 36,238
Pool #C00922, 8.00%, 2/1/30 ........................ 218,412 229,944
Pool #C54447, 7.00%, 7/1/31 ........................ 39,406 40,662
Pool #C60712, 6.50%, 11/1/31 ....................... 625,614 641,534
Pool #C80387, 6.50%, 4/1/26 ........................ 33,745 34,679
Pool #D62926, 6.50%, 8/1/25 ........................ 20,404 20,940
Pool #G01317, 7.00%, 10/1/31 ....................... 175,627 181,224
-----------
4,816,646
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 20.7%
Pool #253438, 8.50%, 9/1/30 ........................ 55,696 59,891
Pool #255770, 5.50%, 7/1/35 ........................ 4,358,875 4,310,043
Pool #329530, 7.00%, 12/1/25 ....................... 101,168 104,672
Pool #329655, 7.00%, 11/1/25 ....................... 44,889 46,444
Pool #356905, 7.06%, 10/1/36 (a) ................... 261,927 264,909
Pool #398958, 6.50%, 10/1/12 ....................... 79,173 80,745
Pool #535332, 8.50%, 4/1/30 ........................ 50,442 54,216
Pool #535440, 8.50%, 8/1/30 ........................ 59,918 64,430
Pool #548965, 8.50%, 7/1/30 ........................ 55,685 59,879
Pool #568486, 7.00%, 1/1/31 ........................ 39,878 41,204
Pool #573752, 8.50%, 2/1/31 ........................ 46,926 50,460
Pool #575328, 6.50%, 4/1/31 ........................ 57,635 59,079
TBA December, 5.00%, 12/1/35 ....................... 7,370,000 7,112,050
TBA December, 6.50%, 12/1/35 ....................... 1,910,000 1,946,894
TBA December, 6.00%, 12/15/35 ...................... 2,900,000 2,915,405
TBA November, 5.50%, 11/15/36 ...................... 5,950,000 5,879,344
-----------
23,049,665
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.3%
Pool #346406, 7.50%, 2/15/23 ....................... 70,219 73,232
Pool #412530, 7.50%, 12/15/25 ...................... 92,567 96,644
Pool #781300, 7.00%, 6/15/31 ....................... 166,934 172,709
TBA November, 6.00%, 11/15/36 ...................... 1,080,000 1,094,514
-----------
1,437,099
-----------
U.S. TREASURY BONDS - 3.4%
4.50%, 2/15/36 ..................................... 3,890,000 3,754,457
-----------
U.S. TREASURY INFLATION PROTECTED BONDS - 1.0%
2.50%, 7/15/16 ..................................... 1,050,000 1,075,372
-----------
U.S. TREASURY NOTES - 14.0%
4.875%, 4/30/08 .................................... 1,398,000 1,399,911
4.875%, 5/31/08 .................................... 5,850,000 5,859,829
5.125%, 6/30/08 .................................... 350,000 352,078
4.875%, 10/31/08 ................................... 800,000 802,687
4.50%, 2/15/09 ..................................... 2,350,000 2,342,015
4.875%, 5/15/09 .................................... 450,000 452,566
4.75%, 3/31/11 ..................................... 470,000 473,176
4.50%, 9/30/11 ..................................... 950,000 946,697
4.875%, 8/15/16 .................................... 2,830,000 2,888,810
-----------
15,517,769
-----------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (COST $49,270,548) .................. $49,651,008
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 24.4%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
AUTO MANUFACTURERS - 0.3%
General Motors Corp., 7.125%, 7/15/13 .............. 400,000 358,000
-----------
BANKS - 0.3%
JP Morgan Chase Bank NA, 2.53%,
1/3/12 (b)** .................................... 845,000 356,763
-----------
BUILDING PRODUCTS - 1.1%
Masco Corp., 6.125%, 10/3/16 ....................... 1,200,000 1,204,788
-----------
CABLE - 0.6%
Comcast Corp., 6.50%, 1/15/15 ...................... 650,000 680,237
-----------
CHEMICALS - 0.4%
Lyondell Chemical Co., 8.25%, 9/15/16,
Callable 9/15/11 @ 104.125 ...................... 400,000 412,000
-----------
COLLEGES & UNIVERSITIES - 1.5%
Tulane University of Louisiana, 6.21%,
11/15/12 (a) (c) ................................ 1,700,000 1,705,100
-----------
ELECTRIC - 2.4%
General Electric Co., 5.00%, 2/1/13 ................ 1,700,000 1,685,023
Progress Energy, Inc., 5.80%, 11/14/08,
Callable 11/14/06 @ 100 (a) ..................... 1,000,000 1,001,631
-----------
2,686,654
-----------
FINANCE - 4.0%
Ford Motor Credit Corp., 5.80%, 1/12/09 ............ 1,250,000 1,193,950
General Motors Acceptance Corp., 4.375%,
12/10/07 ........................................ 2,250,000 2,207,196
International Lease Finance Corp., 5.70%,
7/1/11 (a) ...................................... 1,000,000 1,004,873
-----------
4,406,019
-----------
HOTELS & LODGING - 0.7%
MGM Mirage, Inc., 6.00%, 10/1/09 ................... 800,000 790,000
-----------
OFFICE EQUIPMENT & SERVICES - 1.4%
Xerox Corp., 6.16%, 12/18/09 (a) ................... 550,000 552,750
Xerox Corp., 6.875%, 8/15/11 ....................... 950,000 973,750
-----------
1,526,500
-----------
OIL & GAS - 0.4%
Williams Partners LP, 7.50%, 6/15/11 (c) ........... 400,000 410,000
-----------
REAL ESTATE - 1.1%
Realogy, Corp., 6.50%, 10/15/16 (c) ................ 1,150,000 1,178,743
-----------
RETAIL - 0.7%
Federated Department Stores, 6.90%,
4/1/29 .......................................... 750,000 774,291
-----------
TELECOMMUNICATIONS - 7.0%
AOL Time Warner, Inc., 7.70%, 5/1/32 ............... 1,000,000 1,138,892
AT&T, Inc., 5.10%, 9/15/14 ......................... 1,150,000 1,120,293
Bell Atlantic Virginia, 7.625%, 12/1/12 ............ 1,000,000 1,083,364
Bell Telephone Co. Pennsylvania, 8.75%,
8/15/31 ......................................... 850,000 1,027,181
Sprint Capital Corp., 8.75%, 3/15/32 ............... 1,600,000 1,976,730
Time Warner Entertainment Co., 8.375%,
3/15/23 ......................................... 1,300,000 1,534,449
-----------
7,880,909
-----------
83 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
TRANSPORTATION - 1.5%
Burlington Northern Santa Fe Railway Co.,
7.57%, 1/2/21 ................................... 309,623 349,673
Union Pacific Corp., 6.85%, 1/2/19 ................. 1,218,585 1,308,711
-----------
1,658,384
-----------
WASTE DISPOSAL - 1.0%
Allied Waste North America, 7.125%,
5/15/16, Callable 5/15/11 @ 103.563 ............. 1,150,000 1,138,500
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $26,889,337) .............................. 27,166,888
-----------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES - 13.8%
- --------------------------------------------------------------------------------
Americredit Auto Receivables Trust
Series 2004-DF, Class A3, 2.98%,
7/6/09 .......................................... 610,420 605,432
Asset Backed Funding Certificates
Series 2003-AHL1, Class A1, 3.68%,
3/25/33 ......................................... 738,743 722,079
Capital Auto Receivables Asset Trust
Series 2006-1, Class A2A, 5.03%,
9/15/08 ......................................... 1,447,890 1,445,442
Capital One Auto Finance Trust
Series 2006-B, Class A2, 5.53%,
5/15/09 ......................................... 600,000 601,508
Citigroup Mortgage Loan Trust, Inc.
Series 2005-WF2, Class AF2, 4.92%,
8/25/35 ......................................... 694,366 687,133
Countrywide Asset-Backed Certificates
Series 2006-S4, Class A3, 5.80%,
10/25/36 ........................................ 1,060,000 1,057,875
DB Master Finance LLC Series 2006-1,
Class A2, 5.78%, 6/20/31, (c) ................... 650,000 660,930
GMAC Mortgage Corp. Loan Trust
Series 2006-HE3, Class A3, 5.805%,
10/25/36 ........................................ 900,000 903,622
GSAA Home Equity Trust Series 2006-15,
Class AF3A, 5.88%, 9/25/36 ...................... 870,000 872,071
MBNA Credit Card Master Note Trust
Series 2006-A4, Class A4, 5.31%,
9/15/11 (a) ..................................... 2,000,000 2,000,452
Nomura Asset Acceptance Corp.
Series 2006-AP1, Class A2, 5.515%,
2/25/36 ......................................... 750,000 745,483
SLM Student Loan Trust Series 2003-12,
Class A3, 5.51%, 12/15/15 (a) ................... 1,838,989 1,843,552
Target Credit Card Master Trust
Series 2002-1, Class A, 5.515%,
6/27/11 (a) ..................................... 3,200,000 3,202,795
-----------
TOTAL ASSET BACKED SECURITIES
(COST $15,333,281) .............................. 15,348,374
-----------
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES - 10.6%
- --------------------------------------------------------------------------------
Banc of America Commercial Mortgage,
Inc. Series 2006-3, Class A4, 5.89%,
7/10/44 ......................................... 760,000 792,415
Bear Stearns Commercial Mortgage
Securities Series 2006-T24, Class A4,
5.54%, 10/12/41 ................................. 1,100,000 1,119,422
Citigroup Commercial Mortgage Trust
Series 2006-C4, Class A3, 5.72%,
3/15/49 (a) ..................................... 1,000,000 1,035,973
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
Citigroup/Deutsche Bank Commercial
Mortgage Series 2006-CD3, Class A2,
5.56%, 10/15/48 ................................. 1,100,000 1,114,007
Commercial Mortgage Pass-Through
Certificate Series 2005-FL11, Class A1,
5.47%, 11/15/17 (a) (c) ......................... 569,916 569,990
DLJ Mortgage Acceptance Corp. IO
Series 1997-CF1, Class S, 0.90%,
5/15/30 (c) (d) ................................. 275,857 2,151
GMAC Commercial Mortgage Securities,
Inc. IO Series 1996-C1, Class X2,
2.89%, 10/15/28 (d) ............................. 42,404 3
GMAC Commercial Mortgage Securities,
Inc. Series 1999-C3, Class A2, 7.18%,
8/15/36 ......................................... 1,340,049 1,396,306
Greenwich Capital Commercial Funding
Corp. Series 2005-GG3, Class A2,
4.305%, 8/10/42 ................................. 1,260,000 1,230,874
Greenwich Capital Commercial Funding
Corp. Series 2006-GG7, Class A4,
5.91%, 7/10/38 (a) .............................. 1,000,000 1,050,190
GS Mortgage Securities Corp. IO
Series 1997-GL, Class X2, 0.82%,
7/13/30 (d) ..................................... 360,933 2,135
LB-UBS Commercial Mortgage Trust
Series 2000-C3, Class A1, 7.95%,
7/15/09 ......................................... 45,349 45,564
LB-UBS Commercial Mortgage Trust
Series 2006-C1, Class A4, 5.16%,
2/15/31 ......................................... 1,300,000 1,288,178
LB-UBS Commercial Mortgage Trust
Series 2006-C6, Class A4, 5.37%,
9/15/39 ......................................... 1,100,000 1,105,918
Morgan Stanley Capital I
Series 2006-IQ11, Class AM, 5.95%,
10/15/42 (a) .................................... 1,000,000 1,035,638
-----------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES
(COST $11,632,494) .............................. 11,788,764
-----------
- --------------------------------------------------------------------------------
FOREIGN BONDS - 8.8%
- --------------------------------------------------------------------------------
CANADA - 1.9%
Conocophilips Canada, 5.625%, 10/15/16 ............. 1,000,000 1,014,030
Nova Chemicals Corp., 6.50%, 1/15/12 ............... 1,200,000 1,128,000
-----------
2,142,030
-----------
CAYMAN ISLANDS - 1.0%
Preferred Term Securities XXII, 5.73%,
9/22/36, Callable 6/22/11 @ 100
(a) (c) ......................................... 1,100,000 1,102,750
-----------
DOMINICAN REPUBLIC - 0.2%
Dominican Republic Treasury Bill, 13.00%,
10/22/07 (b) (c) ................................ 300,000 261,790
-----------
ICELAND - 2.5%
Kaupthing Bank, 6.07%, 1/15/10 (a) (c) ............. 500,000 499,745
Kaupthing Bank, 7.125%, 5/19/16 (c) ................ 500,000 532,627
Kaupthing Bank, 6.125%, 10/4/16 (c) ................ 500,000 508,027
Landsbanki Islands HF, 6.10%,
8/25/09 (a) (c) ................................. 1,250,000 1,250,262
-----------
2,790,661
-----------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 84
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
FOREIGN BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
KOREA - 1.3%
Citibank Korea Inc., 4.68%, 6/18/13,
Callable 6/18/08 @ 100 (a) ...................... 1,400,000 1,402,759
-----------
UNITED KINGDOM - 1.9%
Barclays Bank plc, 5.93%, 12/15/16 (c) ............. 700,000 706,734
Granite Master Issuer plc Series 2005-4,
Class A3, 5.46%, 12/20/54 (a) ................... 1,400,000 1,400,154
-----------
2,106,888
-----------
TOTAL FOREIGN BONDS
(COST $9,707,560) ............................... 9,806,878
-----------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 8.4%
- --------------------------------------------------------------------------------
Countrywide Home Loans
Series 2005-HYB8, Class 2A1, 5.34%,
12/20/35 (a) .................................... 1,520,345 1,520,676
Fannie Mae IO Series 2000-16, Class PS,
3.28%, 10/25/29 (d) ............................. 65,854 3,870
Fannie Mae IO Series 2000-32, Class SV,
3.28%, 3/18/30 (d) .............................. 14,957 248
Fannie Mae IO Series 2001-4, Class SA,
2.23%, 2/17/31 (d) .............................. 271,370 17,121
Fannie Mae IO Series 270, Class 2,
8.50%, 9/1/23 (d) ............................... 56,363 12,295
Fannie Mae IO Series 296, Class 2,
8.00%, 4/1/24 (d) ............................... 66,174 15,577
Fannie Mae IO Series 306, Class IO,
8.00%, 5/1/30 (d) ............................... 80,259 18,792
FHA Weyerhauser, 7.43%, 1/1/24 (e) (f) ............. 33,926 33,926
Freddie Mac IO Series 1534, Class K,
2.025%, 6/15/23 (d) ............................. 175,172 7,814
Freddie Mac IO Series 2141, Class SD,
2.83%, 4/15/29 (d) .............................. 136,110 12,717
Freddie Mac IO Series 2247, Class SC,
2.18%, 8/15/30 (d) .............................. 90,779 3,361
Freddie Mac Reference Remic
Series R009, Class AJ, 5.75%, 12/15/18 .......... 1,350,000 1,357,863
Freddie Mac Series 2962, Class CJ, 5.50%,
11/15/23 ........................................ 1,926,276 1,927,686
Government National Mortgage Association
IO Series 1999-30, Class S, 3.28%,
8/16/29 (d) ..................................... 75,200 5,169
Government National Mortgage Association
IO Series 1999-30, Class SA, 2.68%,
4/16/29 (d) ..................................... 101,630 5,587
Government National Mortgage Association
IO Series 1999-32, Class SB, 2.68%,
7/16/27 (d) ..................................... 16,710 225
J.P. Morgan Alternative Loan Trust
Series 2005-S1, Class 2A9, 6.00%,
12/25/35 ........................................ 2,169,565 2,165,861
Morgan Stanley Mortgage Loan Trust
Series 2006-3AR, Class 2A3, 5.90%,
3/25/36 (a) ..................................... 1,515,739 1,530,967
Residential Asset Securitization Trust
Series 2006-A1, Class 1A3, 6.00%,
4/25/36 ......................................... 687,899 694,193
-----------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $9,350,400) ............................... 9,333,948
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 2.7%
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 2.7%
HSBC Investor Money Market Fund
Class I Shares, 5.23% (g) * ..................... 2,998,076 2,998,076
-----------
TOTAL INVESTMENT COMPANIES
(COST $2,998,076) ............................... 2,998,076
-----------
TOTAL INVESTMENTS
(COST $125,181,696) - 113.4% .................... 126,093,936
===========
- ----------
Percentages indicated are based on net assets of $111,191,931.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on October 31, 2006. The
maturity dates presented reflect the final maturity date. However, some of
these securities may contain put or demand features that allow the fund to
require the issuer to repurchase the security from the fund within various
time periods, including daily, weekly, monthly, or semi-annually.
(b) Discount note. Rate presented represents the effective yield at time of
purchase.
(c) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(d) Interest-Only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of an
Interest-Only is extremely sensitive to the rate of principal payments on
the underlying mortgage assets. A rapid (slow) rate of principal
repayments may have an adverse (positive) effect on yield to maturity.
Interest rate adjusts periodically based on the pay off of the underlying
mortgage. The interest rate presented represents the rates in effect on
October 31, 2006. The principal amount shown is the notional amount of the
underlying mortgages.
(e) Rule 144a, section 4(2) or other security which is restricted as to resale
to institutional investors. The Investment Adviser, using Board approved
procedures, has deemed these securities to be illiquid. Represents 0.03%
of net assets.
(f) Security was fair valued as of October 31, 2006. Represents 0.03% of net
assets.
(g) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
** The principal amount of the security is denominated in Brazilian Real.
IO - Interest-only security. Represents 0.10% of net assets.
TBA - Security was traded on a "to be announced" basis. Represents 17.04% of net
assets.
85 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
At October 31, 2006, the Portfolio's open forward currency contracts were as
follows:
CONTRACT CONTRACT UNREALIZED
DELIVERY AMOUNT VALUE APPRECIATION/
CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION)
- -------- --------- ---------------- ------------- -------- --------------
SHORT CONTRACTS
Icelandic Krona vs. U.S. Dollar ..... 11/2/2006 18,643,438 $ 273,436 $275,668 $ (2,232)
Mexican Nuevo Peso vs. U.S. Dollar .. 11/1/2006 6,143,733 573,966 571,494 2,472
------------- -------- --------------
TOTAL SHORT CONTRACTS .............................................. $ 847,402 $847,162 $ 240
============= ======== ==============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 86
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 96.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
ADVERTISING SERVICES - 3.4%
Iron Mountain, Inc., 8.625%, 4/1/13,
Callable 4/1/06 @ 104.313 ...................... 250,000 257,500
R.H. Donnelley Corp., 6.875%, 1/15/13,
Callable 1/15/09 @ 103.438 ..................... 100,000 94,125
R.H. Donnelley Corp., 6.875%, 1/15/13,
Callable 1/15/09 @ 103.438 ..................... 90,000 84,713
----------
436,338
----------
AEROSPACE & DEFENCE - 0.8%
DRS Technologies, Inc., 7.625%, 2/1/18,
Callable 2/1/11 @ 103.813 ...................... 100,000 102,250
----------
APPAREL MANUFACTURERS - 1.5%
Levi Strauss & Co., 8.875%, 4/1/16,
Callable 4/1/11 @ 104.44 ....................... 50,000 51,375
Quiksilver, Inc., 6.875%, 4/15/15, Callable
04/15/10 @ 103.44 .............................. 150,000 144,375
----------
195,750
----------
AUTO MANUFACTURERS - 1.1%
General Motors Corp., 7.125%, 7/15/13 ............. 150,000 134,250
----------
BUILDING & CONSTRUCTION PRODUCTS -2.3%
Ainsworth Lumber Co. Ltd., 7.25%,
10/1/12, Callable 10/1/08 @ 103.63 ............. 150,000 111,375
Interline Brands, Inc., 8.125%, 6/15/14,
Callable 6/15/10 @ 104.06 ...................... 50,000 51,125
Ply Gem Industries, Inc., 9.00%, 2/15/12,
Callable 2/15/08 @ 104.50 ...................... 150,000 125,250
----------
287,750
----------
CABLE TELEVISION - 3.9%
Cablevision Systems Corp., 8.00%, 4/15/12 ......... 250,000 242,813
Mediacom LLC, 7.875%, 2/15/11, Callable
2/15/06 @ 103.938 .............................. 250,000 248,750
----------
491,563
----------
CHEMICALS - 4.6%
Georgia Gulf Corp., 9.50%, 10/15/14,
Callable 10/15/10 @ 104.75 (a) ................. 75,000 73,875
Huntsman International LLC, 7.875%,
11/15/14, Callable 11/15/10 @103.94(a) ......... 35,000 35,219
JohnsonDiversey, Inc., 9.625%, 5/15/12,
Callable 5/15/07 @ 104.813 ..................... 250,000 255,312
Lyondell Chemical Co., 8.00%, 9/15/14,
Callable 9/15/10 @ 104 ......................... 25,000 25,563
Lyondell Chemical Co., 8.25%, 9/15/16,
Callable 9/15/11 @ 104.125 ..................... 25,000 25,750
Millennium America, Inc., 9.25%, 6/15/08 .......... 25,000 25,750
PQ Corp., 7.50%, 2/15/13, Callable
02/15/09 @ 103.75 .............................. 150,000 143,624
----------
585,093
----------
COMPUTER SERVICES - 0.2%
Compucom Systems, Inc., 12.00%, 11/1/14,
Callable 11/1/10 @ 106 (a) ..................... 25,000 25,156
----------
COMPUTER SOFTWARE - 0.4%
Activant Solutions Holdings, Inc., 9.50%,
5/1/16, Callable 5/1/11 @ 104.75 (a) ........... 50,000 46,500
----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
CONTAINERS-PAPER AND PLASTIC - 3.5%
Solo Cup Co., 8.50%, 2/15/14, Callable
2/15/09 @ 104.25 ............................... 250,000 211,250
Stone Container Finance Co. of Canada,
7.375%, 7/15/14, Callable 7/15/09
@ 103.688 ...................................... 250,000 229,688
----------
440,938
----------
DISTRIBUTION & WHOLESALE - 0.8%
Baker & Taylor, Inc., 11.50%, 7/1/13,
Callable 7/1/10 @ 105.75 (a) ................... 100,000 100,000
----------
DIVERSIFIED OPERATIONS - 0.6%
Stripes Acquisition LLC/Susser Finance
Corp., 10.625%, 12/15/13, Callable
12/15/09 @ 105.313 (a) ......................... 72,000 78,120
----------
EDUCATION - 0.4%
Education Management LLC, 8.75%,
6/1/14, Callable 6/1/10 @104.38 (a) ............ 25,000 25,625
Education Management LLC, 10.25%,
6/1/16, Callable 6/1/11 @ 105.13 (a) ........... 25,000 25,938
----------
51,563
----------
ELECTRIC - 1.3%
AES Corp., 7.75%, 3/1/14 .......................... 60,000 62,850
CMS Energy Corp., 6.875%, 12/15/15 ................ 100,000 101,750
----------
164,600
----------
ENERGY - 3.7%
Copano Energy LLC, 8.125%, 3/1/16,
Callable 3/1/11 @ 104.06 ....................... 80,000 81,400
Massey Energy, Co., 6.875%, 12/15/13,
Callable 12/15/09 @ 103.44 ..................... 100,000 93,750
Mirant North America LLC, 7.375%,
12/31/13, Callable 12/31/09 @ 103.688 .......... 50,000 50,563
Williams Cos., 6.375%, 10/1/10 (a) ................ 250,000 248,750
----------
474,463
----------
FINANCE - 10.6%
Basell AF SCA, 8.375%, 8/15/15, Callable
8/15/10 @ 104.188 (a) .......................... 250,000 253,750
CCM Merger, Inc., 8.00%, 8/1/13, Callable
8/1/09 @ 104 (a) ............................... 250,000 240,938
Crystal U.S. Holdings Corp., 0.00%,
10/1/14, Rate set to step up to 10.5%
on 10/1/09, Callable 10/1/09 @
105.25 (b) (c) ................................. 250,000 210,000
Ford Motor Credit Co., 7.375%, 10/28/09 ........... 250,000 243,343
Ford Motor Credit Co., 7.375%, 2/1/11 ............. 50,000 47,774
General Motors Accept Corp., 6.875%,
8/28/12 ........................................ 300,000 300,804
Nalco Finance Holdings, Inc., 0.00%,
2/1/14, Rate set to step to 9.0% on
2/1/09, Callable 2/1/09 @ 104.5 (b)(c) ......... 75,000 60,750
----------
1,357,359
----------
GAMBLING - 6.5%
Choctaw Resort Development
Entertainment, 7.25%, 11/15/19, Callable
11/15/11 @ 103.63 (b) .......................... 50,000 49,750
Greektown Holdings, Inc., 10.75%, 12/1/13,
Callable 12/1/10 @ 105.375 (b) ................. 100,000 105,749
Inn of the Mountain Gods, 12.00%,
11/15/10, Callable 11/15/07 @ 106 .............. 50,000 53,500
87 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
Isle of Capri Casinos, Inc., 7.00%, 3/1/14,
Callable 3/1/09 @ 103.50 ....................... 250,000 239,999
MGM MIRAGE, Inc., 6.75%, 4/1/13 ................... 100,000 97,000
MTR Gaming Group, Inc., 9.00%, 6/1/12,
Callable 6/1/09 @ 104.50 (a) ................... 100,000 101,375
Pokagon Gaming Authority, 10.375%,
6/15/14, Callable 6/15/10 @ 105.19 (a) ......... 75,000 80,438
San Pasqual Casino, 8.00%, 9/15/13,
Callable 9/15/09 @ 104 (b) ..................... 25,000 25,500
Turning Stone Resort Casino, 9.125%,
9/15/14, Callable 9/15/10 @ 104.563 (a) ........ 75,000 76,313
----------
829,624
----------
INTERNET SERVICES - 0.4%
Atlantic Broadband Finance LLC, 9.375%,
1/15/14, Callable 01/15/09 @ 104.69 ............ 50,000 49,750
----------
LEISURE - 2.9%
AMC Entertainment, Inc., 11.00%, 2/1/16,
Callable 2/1/11 @ 105.5 ........................ 100,000 110,625
K2, Inc., 7.375%, 7/1/14, Callable 7/1/09
@ 103.688 ...................................... 258,000 255,420
----------
366,045
----------
MACHINERY--FARM - 0.4%
Case New Holland, Inc., 7.125%, 3/1/14,
Callable 3/1/10 @ 103.563 ...................... 50,000 50,375
----------
MANUFACTURING - 0.8%
AGY Holding Corp., 11.00%, 11/15/14,
Callable 11/15/10 @ 105.50 (a) ................. 50,000 50,250
Libbey Glass, Inc., 12.435%, 6/1/11,
Callable 6/1/08 @ 107.50 (a) ................... 25,000 26,500
Nutro Products, Inc., 10.75%, 4/15/14,
Callable 4/15/09 @ 108.063 (a) ................. 25,000 26,875
----------
103,625
----------
MEDICAL - 1.6%
MultiPlan, Inc., 10.375%, 4/15/16, Callable
4/15/11 @ 105.188 (a) .......................... 100,000 100,000
Omnicare, Inc., 6.75%, 12/15/13, Callable
12/15/09 @ 103.375 ............................. 100,000 98,000
----------
198,000
----------
METAL PROCESSORS & FABRICATION - 1.1%
PNA Group, Inc., 10.75%, 9/1/16, Callable
9/1/11 @ 105.375 (a) ........................... 50,000 51,500
TriMas Corp., 9.875%, 6/15/12, Callable
6/15/07 @ 104.938 .............................. 100,000 94,250
----------
145,750
----------
METALS & MINING - 3.1%
AK Steel Corp., 7.75%, 6/15/12, Callable
6/15/07 @ 103.875 .............................. 200,000 200,000
Gibraltar Industries, Inc., 8.00%, 12/1/15,
Callable 12/1/10 @ 104 ......................... 150,000 148,500
International Coal Group, Inc., 10.25%,
7/15/14, Callable 7/15/10 @ 105.13 (a) ......... 50,000 48,625
----------
397,125
----------
OIL & GAS - 10.5%
Chaparral Energy, Inc., 8.50%, 12/1/15,
Callable 12/1/10 @ 104.25 ...................... 100,000 99,750
Chesapeake Energy Corp., 6.875%,
1/15/16, Callable 1/15/09 @ 103.438 ............ 250,000 248,124
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
Clayton Williams Energy, Inc., 7.75%,
8/1/13, Callable 8/1/09 @ 103.875 .............. 200,000 184,500
Colorado Interstate Gas Co., 6.80%,
11/15/15 ....................................... 150,000 152,440
Compton Petroleum Finance Corp.,
7.625%, 12/1/13, Callable 12/1/09 @
103.813 ........................................ 250,000 236,875
El Paso Production Holdings, 7.75%,
6/1/13, Callable 6/1/08 @ 103.875 .............. 150,000 153,750
Inergy LP/Inergy Finance, 8.25%, 3/1/16,
Callable 3/1/11 @ 104.13 ....................... 100,000 103,750
Pogo Producing Co., 7.875%, 5/1/13,
Callable 5/1/10 @ 103.94 (a) ................... 100,000 101,750
Swift Energy Co., 7.625%, 7/15/11,
Callable 7/15/08 @ 103.81 ...................... 50,000 50,125
----------
1,331,064
----------
PAPER & RELATED PRODUCTS - 4.1%
Abitibi-Consolidated Co. of Canada,
8.375%, 4/1/15 ................................. 250,000 217,813
Exopack Holding Corp., 11.25%, 2/1/14,
Callable 2/1/10 @ 105.625 (a) .................. 50,000 52,375
Georgia-Pacific Corp., 7.70%, 6/15/15 ............. 150,000 152,250
Norampac, Inc., 6.75%, 6/1/13, Callable
6/1/08 @ 103.38 ................................ 100,000 96,250
----------
518,688
----------
PIPELINES - 1.6%
Dynegy Holdings, Inc., 8.375%,5/1/16 .............. 150,000 154,125
Semgroup LP, 8.75%, 11/15/15, Callable
11/15/10 @ 104.375 (a) ......................... 50,000 50,375
----------
204,500
----------
PRINTING - 0.8%
Sheridan Group, Inc., 10.25%, 8/15/11,
Callable 08/15/07 @ 105.12 ..................... 100,000 102,000
----------
PUBLISHING - 2.3%
Block Communications, Inc., 8.25%,
12/15/15, Callable 12/15/10 @
104.125 (a) .................................... 50,000 49,250
Morris Publishing, 7.00%, 8/1/13, Callable
8/1/08 @ 103.50 ................................ 250,000 237,813
----------
287,063
----------
RENTAL--AUTO AND EQUIPMENT - 1.6%
Avis Budget Car Rental, Inc., 7.625%,
5/15/14, Callable 5/15/10 @ 103.81 (a) ......... 100,000 97,750
Hertz Corp., 8.875%, 1/1/14, Callable
1/1/10 @ 104.44 (b) ............................ 100,000 104,500
----------
202,250
----------
RESEARCH AND TESTING SERVICES - 0.4%
Sensata Technologies BV, 8.00%, 5/1/14,
Callable 5/1/10 @ 104 (a) ...................... 50,000 48,250
----------
RESTAURANTS - 2.7%
Buffets, Inc., 12.50%, 11/1/14, Callable
11/1/10 @ 106.25 (a) ........................... 50,000 50,250
Dave & Busters, Inc., 11.25%, 3/15/14,
Callable 3/15/10 @ 105.62 ...................... 50,000 48,500
Landry's Restaurants, Inc., 7.50%,
12/15/14, Callable 12/15/09 @103.75 ............ 200,000 191,000
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 88
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
NPC International, Inc., 9.50%, 5/1/14,
Callable 5/1/10 @ 104.75 (a) ................... 50,000 50,625
----------
340,375
----------
RETAIL - 2.3%
Linens 'N Things, Inc., 11.00%, 1/15/14,
Callable 1/15/08 @ 102 (b) ..................... 50,000 49,000
The Jean Coutu Group PJC, Inc., 8.50%,
8/1/14, Callable 8/1/09 @ 104.25 ............... 250,000 245,313
----------
294,313
----------
SEISMIC DATA COLLECTION - 0.4%
CIE Gener de Geophysique, 7.50%,
5/15/15, Callable 5/15/10 @ 103.75 ............. 50,000 49,375
----------
SPECIAL PURPOSE ENTITY - 0.4%
TFS Acquisition Corp., 12.90%, 8/1/14,
Callable 8/1/10 @ 106.50 (a) (b) ............... 50,000 49,438
----------
TELECOMMUNICATIONS - 11.7%
Centennial Communications Corp., 10.00%,
1/1/13, Callable 1/1/09 @ 107.50 ............... 100,000 103,750
Cincinnati Bell, Inc., 8.375%, 1/15/14,
Callable 1/15/09 @ 104.1885 .................... 250,000 254,999
Cricket Communications I, 9.375%,
11/1/14, Callable 11/1/10 @ 104.69 (a) ......... 50,000 51,000
Insight Midwest L.P., 9.75%, 10/1/09,
Callable 10/1/07 @ 100 ......................... 250,000 254,374
Level 3 Financing, Inc., 9.25%, 11/1/14,
Callable 11/1/10 @ 104.63 (a) .................. 50,000 50,313
Metropcs Wireless, Inc., 9.25%, 11/1/14,
Callable 11/1/10 @ 104.625 (a) ................. 50,000 50,438
Nordic Telephone Co. Holdings, 8.875%,
5/1/16, Callable 5/1/11 @ 104.438 (a) .......... 50,000 52,375
NTL Cable plc, 9.125%, 8/15/16, Callable
8/15/11 @ 104.56 ............................... 125,000 131,406
Panamsat Corp., 9.00%, 6/15/16, Callable
6/15/11 @ 104.50 (a) ........................... 50,000 52,250
Qwest Corp., 5.625%, 11/15/08 ..................... 150,000 149,437
Rural Cellular Corp., 9.75%, 1/15/10,
Callable 1/15/07 @ 103.25 ...................... 50,000 50,625
Suncom Wireless Holdings, Inc., 8.50%,
6/1/13, Callable 6/1/08 @ 104.25 ............... 150,000 142,500
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
West Corp., 11.00%, 10/15/16, Callable
10/15/11 @ 105.50 (b) .......................... 25,000 25,063
Wind Acquisition Financial SA, 10.75%,
12/1/15, Callable 12/1/10 @ 105.375 (a) ........ 100,000 111,125
Windstream Corp., 8.625%, 8/1/16,
Callable 8/1/11 @ 104.31 (a) ................... 25,000 26,969
----------
1,506,624
----------
WASTE DISPOSAL - 2.0%
Allied Waste North America, Inc., 7.375%,
4/15/14, Callable 4/15/09 @ 103.688 ............ 250,000 248,750
----------
TOTAL CORPORATE OBLIGATIONS
(COST $12,228,088) ............................. 12,294,677
----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 2.2%
- --------------------------------------------------------------------------------
Investors Bank Trust Cash Reserve,
3.65% (d) ...................................... 281,588 281,588
----------
TOTAL INVESTMENT COMPANIES
(COST $281,588) ................................ 281,588
----------
TOTAL INVESTMENTS
(COST $12,509,676) - 98.9% ........................ 12,576,265
==========
- ----------
Percentages indicated are based on net assets of $12,718,765.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on October 31, 2006. The
maturity dates presented reflect the final maturity date. However, some of
these securities may contain put or demand features that allow the fund to
require the issuer to repurchase the security from the fund within various
time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(c) Step Bond. Income recognition is on the effective yield method for Step
Bonds.
(d) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
89 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 36.9%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
FEDERAL HOME LOAN MORTGAGE CORP. - 3.5%
Pool #1B2655, 4.14%, 12/1/34(a) ................... 288,826 286,272
Pool #1J1313, 6.58%, 6/1/36 ....................... 382,361 388,010
----------
674,282
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 22.0%
Pool #255770, 5.50%, 7/1/35 ....................... 888,703 878,747
Pool #740686, 6.50%, 10/1/33 ...................... 539,712 552,694
TBA December, 5.00%, 12/1/35 ...................... 1,300,000 1,254,500
TBA December, 6.00%, 12/15/35 ..................... 600,000 603,187
TBA November, 5.50%, 11/15/36 ..................... 1,000,000 988,125
----------
4,277,253
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -1.0%
TBA November, 6.00%, 11/15/36 ..................... 200,000 202,688
----------
U.S. TREASURY INFLATION PROTECTED BONDS -1.0%
2.50%, 7/15/16 .................................... 200,000 204,833
----------
U.S. TREASURY NOTES - 9.4%
5.125%, 6/30/08 ................................... 50,000 50,297
4.625%, 9/30/08 ................................... 1,200,000 1,198,077
4.875%, 10/31/08 .................................. 150,000 150,504
4.50%, 9/30/11 .................................... 265,000 264,079
4.875%, 8/15/16 ................................... 150,000 153,117
----------
1,816,074
----------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (COST $7,153,629) .................. 7,175,130
----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -26.6%
- --------------------------------------------------------------------------------
AUTO MANUFACTURERS - 0.2%
General Motors Corp., 7.125%, 7/15/13 ............. 50,000 44,750
----------
BUILDING PRODUCTS - 1.0%
Masco Corp., 6.125%, 10/3/16 ...................... 200,000 200,798
----------
CABLE - 1.6%
Comcast Corp., 6.50%, 1/15/15 ..................... 300,000 313,956
----------
CHEMICALS - 0.4%
Lyondell Chemical Co., 8.25%, 9/15/16,
Callable 9/15/11 @ 104.125 ..................... 75,000 77,250
----------
COLLEGES & UNIVERSITIES - 2.1%
Tulane University of Louisiana, 6.21%,
11/15/12 (a) (b) ............................... 400,000 401,200
----------
ELECTRIC - 2.8%
General Electric Co., 5.00%, 2/1/13 ............... 300,000 297,357
Progress Energy, Inc., 5.80%, 11/14/08,
Callable 11/14/06 @ 100 (a) .................... 250,000 250,408
----------
547,765
----------
FINANCE - 4.9%
Ford Motor Credit Corp., 5.80%, 1/12/09 ........... 275,000 262,669
General Motors Acceptance Corp., 4.375%,
12/10/07 ....................................... 500,000 490,488
International Lease Finance Corp., 5.70%,
7/1/11 (a) ..................................... 200,000 200,975
----------
954,132
----------
HOTELS & LODGING - 0.5%
MGM Mirage, Inc., 6.00%, 10/1/09 .................. 100,000 98,750
----------
MEDIA - 2.1%
Time Warner Entertainment, 8.875%, 10/1/12 ........ 350,000 403,788
----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
OFFICE EQUIPMENT & SERVICES - 1.6%
Xerox Corp., 6.16%, 12/18/09 (a) .................. 100,000 100,500
Xerox Corp., 6.875%, 8/15/11 ...................... 200,000 205,000
----------
305,500
----------
OIL & GAS - 0.4%
Williams Partners LP, 7.50%, 6/15/11, (b) ......... 75,000 76,875
----------
TELECOMMUNICATIONS - 5.0%
AT&T, Inc., 5.10%, 9/15/14 ........................ 300,000 292,250
Bell Atlantic Virginia, 7.625%, 12/1/12 ........... 200,000 216,673
Sprint Capital Corp., 8.75%, 3/15/32 .............. 150,000 185,318
Verizon Pennsylvania, Inc., 5.65%, 11/15/11 ....... 275,000 276,690
----------
970,931
----------
TRANSPORTATION - 2.9%
Burlington Northern Santa Fe Railway Co.,
4.83%, 1/15/23 ................................. 279,656 279,326
Union Pacific Railroad, 5.08%, 1/2/29 ............. 299,958 290,887
----------
570,213
----------
WASTE DISPOSAL - 1.1%
Allied Waste North America, 7.125%,
5/15/16, Callable 5/15/11 @ 103.563 ............ 225,000 222,750
----------
TOTAL CORPORATE OBLIGATIONS
(COST $5,160,758) .............................. 5,188,658
----------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES - 16.9%
- --------------------------------------------------------------------------------
Americredit Auto Receivables Trust Series
2004-DF, Class A3, 2.98%, 7/6/09 ............... 122,084 121,086
Asset Backed Funding Certificates Series
2003-AHL1, Class A1, 3.68%, 3/25/33 ............ 210,318 205,574
Capital One Auto Finance Trust Series
2006-B, Class A2, 5.53%, 5/15/09 ............... 110,000 110,277
Citigroup Mortgage Loan Trust, Inc. Series
2005-WF2, Class AF2, 4.92%, 8/25/35 ............ 121,819 120,550
Countrywide Asset-Backed Certificates Series
2006-S4, Class A3, 5.80%, 7/25/34 .............. 210,000 209,579
DB Master Finance LLC Series 2006-1,
Class A2, 5.78%, 6/20/31 (b) ................... 130,000 132,186
GMAC Mortgage Corp. Loan Trust Series
2006-HE3, Class A3, 5.805%, 10/25/36 ........... 170,000 170,684
GSAA Home Equity Trust Series 2006-15,
Class AF3A, 5.88%, 9/25/36 ..................... 160,000 160,381
MBNA Credit Card Master Note Trust Series
2003-A3, Class A3, 5.44%, 8/16/10 (a) .......... 500,000 500,804
MBNA Credit Card Master Note Trust Series
2006-A4, Class A4, 5.31%, 9/15/11 (a) .......... 500,000 500,113
Nomura Asset Acceptance Corp. Series
2006-AP1, Class A2, 5.515%, 2/25/36 ............ 150,000 149,097
SLM Student Loan Trust Series 2003-12,
Class A3, 5.51%, 12/15/15 (a) .................. 367,798 368,710
Target Credit Card Master Trust Series
2002-1, Class A, 5.515%, 6/27/11 (a) ........... 550,000 550,479
----------
TOTAL ASSET BACKED SECURITIES
(COST $3,297,802) .............................. 3,299,520
----------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 90
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES - 10.9%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
Banc of America Commercial Mortgage, Inc.
Series 2006-3, Class A4, 5.89%, 7/10/44 ........ 140,000 145,971
Bear Stearns Commercial Mortgage Securities
Series 2006-T24, Class A4, 5.54%,
10/12/41 ....................................... 200,000 203,531
Citigroup Commercial Mortgage Trust Series
2006-C4, Class A3, 5.72%, 3/15/49 (a) .......... 180,000 186,475
Citigroup/Deutsche Bank Commercial
Mortgage Series 2006-CD3, Class A2,
5.56%, 10/15/48 ................................ 200,000 202,547
Commercial Mortgage Pass-Through
Certificate Series 2005-FL11, Class A1,
5.47%, 11/15/17 (a) (b) ........................ 140,143 140,161
GMAC Commercial Mortgage Securities, Inc.
Series 1999-C3, Class A2, 7.18%, 8/15/36........ 211,587 220,470
Greenwich Capital Commercial Funding
Corp. Series 2005-GG3, Class A2, 4.305%,
8/10/42 ........................................ 225,000 219,799
Greenwich Capital Commercial Funding
Corp. Series 2006-GG7, Class A4, 6.11%,
6/10/16 (a) .................................... 200,000 210,038
LB-UBS Commercial Mortgage Trust Series
2006-C1, Class A4, 5.16%, 2/15/31 .............. 200,000 198,181
LB-UBS Commercial Mortgage Trust Series
2006-C6, Class A4, 5.37%, 9/15/39 .............. 200,000 201,076
Morgan Stanley Capital I Series 2006-IQ11,
Class AM, 5.95%, 10/15/42 (a) .................. 200,000 207,128
----------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES
(COST $2,104,723) .............................. 2,135,377
----------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 9.5%
- --------------------------------------------------------------------------------
Countrywide Home Loans Series
2005-HYB8, Class 2A1, 5.34%,
12/20/35 (a) ................................... 382,035 382,119
Freddie Mac Reference Remic Series R009,
Class AJ, 5.75%, 12/15/18 ...................... 250,000 251,456
Freddie Mac Series 2962, Class CJ, 5.50%,
11/15/23 ....................................... 308,204 308,430
J.P. Morgan Alternative Loan Trust Series
2005-S1, Class 2A9, 6.00%, 12/25/35 ............ 467,945 467,146
Morgan Stanley Mortgage Loan Trust Series
2006-3AR, Class 2A3, 5.90%, 3/25/36 (a) ........ 324,801 328,064
Residential Asset Securitization Trust Series
2006-A1, Class 1A3, 6.00%, 4/25/36 ............. 122,503 123,623
----------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $1,863,431) .............................. 1,860,838
----------
- --------------------------------------------------------------------------------
FOREIGN BONDS - 8.0%
- --------------------------------------------------------------------------------
CANADA - 1.7%
Conocophilips Canada, 5.625%, 10/15/16 ............ 150,000 152,105
Nova Chemicals Corp., 6.50%, 1/15/12 .............. 200,000 188,000
----------
340,105
----------
- --------------------------------------------------------------------------------
FOREIGN BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ----------
CAYMAN ISLANDS - 1.0%
Preferred Term Securities XXII, 5.73%,
9/22/36, Callable 6/22/11 @ 100 (a) (b) ........ 200,000 200,500
----------
DOMINICAN REPUBLIC - 0.2%
Dominican Republic Treasury Bill, 13.00%,
10/22/07 (c) ................................... 50,000 43,632
----------
ICELAND - 2.8%
Kaupthing Bank, 6.07%, 1/15/10 (a) (b) ............ 100,000 99,949
Kaupthing Bank, 7.125%, 5/19/16 (b) ............... 100,000 106,525
Kaupthing Bank, 6.125%, 10/4/16 (b) ............... 100,000 101,605
Landsbanki Islands HF, 6.10%, 8/25/09 (a)(b) ...... 225,000 225,047
----------
533,126
----------
KOREA - 1.3%
Citibank Korea Inc., 4.68%, 6/18/13,
Callable 6/18/08 @ 100 (a) ..................... 250,000 250,493
----------
UNITED KINGDOM - 1.0%
Granite Master Issuer plc Series 2005-4,
Class A3, 5.46%, 12/20/54 (a) .................. 200,000 200,022
----------
TOTAL FOREIGN BONDS
(COST $1,549,956) .............................. 1,567,878
----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES -3.2%
- --------------------------------------------------------------------------------
HSBC Investor Money Market Fund Class I
Shares, 5.23% (d) * ............................ 634,275 634,275
----------
TOTAL INVESTMENT COMPANIES
(COST $634,275) ................................ 634,275
----------
TOTAL INVESTMENTS
(COST $21,764,574) -- 112.0% ................... 21,861,676
==========
- ----------
Percentages indicated are based on net assets of $19,516,568.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on October 31, 2006. The
maturity dates presented reflect the final maturity date. However, some of
these securities may contain put or demand features that allow the fund to
require the issuer to repurchase the security from the fund within various
time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(c) Discount note. Rate presented represents the effective yield at time of
purchase.
(d) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
TBA--Security was traded on a "to be announced" basis. Represents 15.62% of net
assets.
91 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
At October 31, 2006, the Portfolio's open forward currency contracts were as
follows:
CURRENCY CONTRACT UNREALIZED
DELIVERY AMOUNT VALUE APPRECIATION/
CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION)
- -------- --------- ---------------- ------------- -------- --------------
SHORT CONTRACTS
Icelandic Krona vs. U.S. Dollar ................ 11/2/2006 3,699,858 $ 54,264 $ 54,707 $(443)
Mexican Nuevo Peso vs. U.S. Dollar ............. 11/1/2006 1,165,191 108,856 108,387 469
-------- -------- -----
TOTAL SHORT CONTRACTS .......................... $163,120 $163,094 $ 26
======== ======== ====
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 92
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AEROSPACE & DEFENSE - 3.4%
General Dynamics Corp. ............................. 15,700 1,116,270
The Boeing Co. ..................................... 11,250 898,425
-----------
2,014,695
-----------
BIOTECHNOLOGY - 3.5%
Gilead Sciences, Inc. (a) .......................... 30,600 2,108,340
-----------
BUSINESS SERVICES - 2.9%
Paychex, Inc. ...................................... 43,700 1,725,276
-----------
CHEMICALS - 2.9%
Monsanto Co. ....................................... 39,250 1,735,635
-----------
COMPUTER SOFTWARE - 10.3%
Adobe Systems, Inc. (a) ............................ 32,600 1,246,950
Automatic Data Processing, Inc. .................... 12,800 632,832
CheckFree Corp. (a) ................................ 24,100 951,468
Electronic Arts, Inc. (a) .......................... 18,250 965,243
Microsoft Corp. .................................... 61,500 1,765,665
SAP AG-ADR ......................................... 11,900 590,716
-----------
6,152,874
-----------
COMPUTERS - 5.0%
Apple Computer, Inc. (a) ........................... 21,400 1,735,112
Research In Motion Ltd. (a) ........................ 10,700 1,257,036
-----------
2,992,148
-----------
CONSUMER PRODUCTS - 11.6%
Colgate-Palmolive Co. .............................. 37,700 2,411,668
Harman International Industries, Inc. .............. 4,100 419,635
PepsiCo, Inc. ...................................... 31,700 2,011,048
The Procter & Gamble Co. ........................... 31,900 2,022,141
-----------
6,864,492
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 3.2%
General Electric Co. ............................... 54,562 1,915,672
-----------
ELECTRONIC COMPONENTS &
SEMICONDUCTORS - 4.0%
Broadcom Corp., Class A (a) ........................ 9,850 298,160
Emerson Electric Co. ............................... 10,200 860,880
Microchip Technology, Inc. ......................... 38,000 1,251,340
-----------
2,410,380
-----------
FINANCIAL SERVICES - 10.6%
Goldman Sachs Group, Inc. .......................... 7,250 1,375,978
SLM Corp. .......................................... 30,050 1,462,834
The Chicago Mercantile Exchange
Holdings, Inc. .................................. 4,000 2,003,999
UBS AG-ADR ......................................... 25,050 1,498,992
-----------
6,341,803
-----------
GAMING - 1.4%
International Game Technology ...................... 20,300 862,953
-----------
HEALTH CARE - 4.2%
Baxter International, Inc. ......................... 18,850 866,535
DENTSPLY International, Inc. ....................... 18,050 564,604
Medtronic, Inc. .................................... 22,250 1,083,130
-----------
2,514,269
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
HOTELS & LODGING - 2.2%
Las Vegas Sands Corp. (a) .......................... 17,500 1,333,500
-----------
INSURANCE - 0.5%
AFLAC, Inc. ..................................... 6,900 309,948
-----------
INTERNET RELATED - 3.0%
Google, Inc., Class A (a) .......................... 3,800 1,810,282
-----------
MOTOR VEHICLES - 0.5%
Harley-Davidson, Inc. .............................. 4,200 288,246
-----------
OIL & GAS - 5.9%
Schlumberger Ltd. .................................. 26,450 1,668,466
Smith International, Inc. .......................... 46,450 1,833,846
-----------
3,502,312
-----------
PHARMACEUTICALS - 11.8%
Abbott Laboratories ................................ 11,750 558,243
Alcon, Inc.-ADR .................................... 6,050 641,784
Allergan, Inc. ..................................... 8,700 1,004,850
Genentech, Inc. (a) ................................ 21,229 1,768,375
Johnson & Johnson .................................. 28,150 1,897,309
Roche Holdings Ltd.-ADR ............................ 6,300 551,317
Schering-Plough Corp. .............................. 27,050 598,887
-----------
7,020,765
-----------
RETAIL - 2.9%
Kohl's Corp. (a) ................................... 6,000 423,600
Target Corp. ....................................... 7,850 464,563
Walgreen Co. ....................................... 19,867 867,791
-----------
1,755,954
-----------
TELECOMMUNICATIONS - 5.2%
Cisco Systems, Inc. (a) ............................ 106,950 2,580,703
QUALCOMM, Inc. ..................................... 15,350 558,587
-----------
3,139,290
-----------
TRANSPORTATION - 2.0%
Expeditors International of Washington, Inc. ....... 25,450 1,206,585
-----------
TOTAL COMMON STOCKS
(COST $52,398,200) .............................. 58,005,419
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 3.5%
- --------------------------------------------------------------------------------
HSBC Investor Money Market Fund
Class I Shares, 5.23% (b)* ...................... 2,114,763 2,114,763
-----------
TOTAL INVESTMENT COMPANIES
(COST $2,114,763) ............................... 2,114,763
-----------
TOTAL INVESTMENTS
(COST $54,512,963) - 100.5% ..................... 60,120,182
===========
- ----------
Percentages indicated are based on net assets of $59,827,764.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
ADR --American Depositary Receipt
93 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.1%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AUSTRALIA - 1.2%
Coles Myer, Ltd. ................................... 148,900 1,565,282
Macquarie Airports ................................. 966,900 2,402,617
-----------
3,967,899
-----------
AUSTRIA - 1.6%
Omv AG ............................................. 49,300 2,679,403
Voestalpine AG ..................................... 59,600 2,810,244
-----------
5,489,647
-----------
BELGIUM - 1.7%
Fortis ............................................. 106,100 4,453,102
KBC Bankverzekeringsholding ........................ 11,300 1,234,342
-----------
5,687,444
-----------
BRAZIL - 1.5%
Gerdau SA ADR ...................................... 75,150 1,109,966
Petroleo Brasileiro SA ADR ......................... 27,700 2,242,591
Unibanco ADR ....................................... 8,100 637,875
Usinas Siderurgicas de Minas Gerais SA ............. 30,200 1,027,125
-----------
5,017,557
-----------
CANADA - 3.5%
Canadian Natural Resources Ltd. .................... 40,300 2,098,098
EnCana Corp. ....................................... 30,000 1,425,047
Gerdau Ameristeel Corp. ............................ 102,700 1,047,399
ING Canada, Inc. ................................... 43,693 2,302,755
IPSCO, Inc. ........................................ 16,449 1,511,757
Nexen, Inc. ........................................ 20,018 1,068,057
Teck Cominco, Ltd., B shares ....................... 32,300 2,378,123
-----------
11,831,236
-----------
CHINA - 0.3%
China Petroleum & Chemical Corp. ................... 592,000 411,074
China Telecom Corp., Ltd. .......................... 1,264,000 476,233
-----------
887,307
-----------
FRANCE - 12.1%
Air France-KLM ..................................... 6,400 227,941
BNP Paribas SA ..................................... 57,980 6,374,071
Credit Agricole SA ................................. 89,990 3,825,184
France Telecom SA .................................. 107,200 2,783,829
Michelin, B Shares ................................. 20,900 1,704,239
Renault SA ......................................... 62,300 7,286,248
Sanofi-Aventis ..................................... 57,800 4,912,307
Societe Generale ................................... 35,385 5,879,137
Total SA ........................................... 110,600 7,487,277
-----------
40,480,233
-----------
GERMANY - 9.6%
Allianz AG ......................................... 9,300 1,720,104
Continental AG ..................................... 51,400 5,745,145
DaimlerChrysler AG ................................. 23,300 1,322,823
Deutsche Lufthansa AG .............................. 162,600 3,741,103
E.ON AG (a) ........................................ 41,000 4,900,809
Fresenius Medical Care AG .......................... 11,800 1,570,543
Muenchener Rueckversicherungs-Gesellschaft
AG .............................................. 43,400 7,021,402
RWE AG ............................................. 44,500 4,385,037
TUI AG ............................................. 75,300 1,643,140
-----------
32,050,106
-----------
GREECE - 0.5%
Public Power Corp. ................................. 61,000 1,556,837
-----------
HONG KONG - 0.5%
China Netcom Group Corp., Ltd. ..................... 462,000 821,022
Sino Land Co., Ltd. ................................ 406,695 708,096
-----------
1,529,118
-----------
HUNGARY - 0.3%
MOL Magyar Olaj-es Gazipari Rt. GDR ................ 9,600 955,200
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
INDIA - 0.3%
State Bank of India GDR ............................ 17,600 1,105,280
-----------
ISRAEL - 0.4%
Bank Hapoalim BM ................................... 286,600 1,428,975
-----------
ITALY - 3.7%
Buzzi Unicem SpA ................................... 91,400 2,408,517
ENI SpA ............................................ 166,500 5,020,666
Fondiaria-SAI SpA .................................. 45,600 2,029,667
Fondiaria-SAI SpA-RNC .............................. 18,700 621,392
Italcementi SpA .................................... 91,700 2,428,124
-----------
12,508,366
-----------
JAPAN - 23.6%
Alps Electric Co., Ltd. ............................ 55,000 550,753
Canon, Inc. ........................................ 32,250 1,729,156
East Japan Railway Co. ............................. 195 1,364,033
EDION Corp. ........................................ 67,800 976,937
Hitachi, Ltd. ...................................... 144,000 831,195
Honda Motor Co., Ltd. .............................. 47,000 1,663,930
Isuzu Motors, Ltd. ................................. 342,000 1,184,454
ITOCHU Corp. ....................................... 167,000 1,330,973
Japan Tobacco, Inc. ................................ 1,200 5,233,453
JFE Holdings, Inc. ................................. 140,100 5,630,836
Kobe Steel, Ltd. ................................... 958,000 2,932,820
Leopalace21 Corp. .................................. 24,900 936,891
Mitsubishi Corp. ................................... 129,000 2,493,073
Mitsubishi UFJ Financial Group, Inc. ............... 172 2,162,134
Mitsui & Co., Ltd. ................................. 171,000 2,335,275
Mitsui Chemicals, Inc. ............................. 417,000 2,863,443
Mitsui O.S.K. Lines, Ltd. .......................... 451,000 3,760,262
Nippon Mining Holdings, Inc. ....................... 360,000 2,690,611
Nippon Telegraph & Telephone Corp. ................. 728 3,666,769
Nissan Motor Co., Ltd. ............................. 225,100 2,696,811
ORIX Corp. ......................................... 19,300 5,438,131
Sharp Corp. ........................................ 216,000 3,851,206
Sony Corp. ......................................... 12,510 518,843
Sumitomo Heavy Industries, Ltd. .................... 163,000 1,396,665
Sumitomo Metal Industries, Ltd. .................... 294,000 1,106,208
Sumitomo Mitsui Financial Group, Inc. .............. 598 6,545,579
The Tokyo Electric Power Co., Inc. ................. 90,600 2,634,171
Tokyo Gas Co., Ltd. ................................ 293,000 1,495,818
Toyota Motor Corp. ................................. 123,900 7,342,459
UNY Co., Ltd. ...................................... 90,000 1,130,580
-----------
78,493,469
-----------
NETHERLANDS - 8.1%
ABN AMRO Holding NV ................................ 97,283 2,836,655
European Aeronautic Defence and Space Co. .......... 125,160 3,393,969
ING Groep NV ....................................... 190,468 8,436,457
Koninklijke Philips Electronics NV ................. 52,120 1,820,382
Mittal Steel Co. NV ................................ 107,652 4,622,645
Royal Dutch Shell plc, A Shares .................... 98,400 3,409,167
Wolters Kluwer NV .................................. 89,700 2,465,594
-----------
26,984,869
-----------
SINGAPORE - 0.6%
Flextronics International, Ltd. (a) ................ 162,400 1,883,840
-----------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 94
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
SOUTH AFRICA - 0.7%
Sanlam, Ltd. ....................................... 554,040 1,318,031
Standard Bank Group, Ltd. .......................... 59,000 693,769
Tiger Brands, Ltd. ................................. 20,800 432,586
-----------
2,444,386
-----------
SOUTH KOREA - 1.9%
Honam Petrochemical Corp. .......................... 8,100 507,379
Hyundai Motors Co., Second Preferred ............... 15,950 753,557
Industrial Bank of Korea GDR ....................... 88,300 1,546,133
Kookmin Bank ADR ................................... 14,600 1,158,656
LG.Philips LCD Co., Ltd. (a) ....................... 13,600 433,167
POSCO ADR .......................................... 29,000 2,045,079
-----------
6,443,971
-----------
SPAIN - 1.7%
Endesa SA .......................................... 22,200 984,161
Repsol YPF SA ...................................... 141,100 4,681,486
-----------
5,665,647
-----------
SWEDEN - 0.6%
Svenska Cellusoa AB, B Shares ...................... 44,800 2,057,038
-----------
SWITZERLAND - 1.9%
Credit Suisse Group ................................ 81,100 4,890,649
Novartis AG ........................................ 24,830 1,507,329
-----------
6,397,978
-----------
TAIWAN - 1.4%
China Steel Corp. GDR .............................. 37,746 666,217
Compal Electronics, Inc. GDR ....................... 229,388 1,000,131
Gigabyte Technology Co., Ltd. ...................... 261,112 189,394
Siliconware Precision Industries Co. ............... 694,000 881,442
Taiwan Semiconductor Manufacturing Co.,
Ltd. ............................................ 505,870 928,733
United Microelectronics Corp. ...................... 1,570,000 876,527
-----------
4,542,444
-----------
THAILAND - 0.2%
PTT Public Company Ltd. plc ........................ 121,400 728,234
-----------
UNITED KINGDOM - 18.2%
AstraZeneca plc .................................... 61,200 3,616,204
Aviva plc .......................................... 346,270 5,118,429
Barclays plc ....................................... 410,200 5,535,314
BHP Billiton plc ................................... 47,100 908,222
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
UNITED KINGDOM, CONTINUED
BP Amoco plc ....................................... 125,000 1,389,949
British Aerospace plc .............................. 485,500 3,884,556
British American Tobacco plc ....................... 75,900 2,068,684
Friends Provident plc .............................. 782,500 3,089,405
George Wimpey plc .................................. 167,400 1,679,428
HBOS plc ........................................... 260,121 5,392,934
Mitchells & Butlers plc ............................ 99,346 1,129,323
Punch Taverns plc .................................. 91,000 1,785,981
Royal & Sun Alliance Insurance Group plc ........... 752,249 2,116,283
Royal Bank of Scotland Group plc ................... 169,100 6,024,772
Royal Dutch Shell plc, B Shares .................... 45,973 1,646,716
Sainsbury plc ...................................... 410,062 3,063,929
Taylor Woodrow plc ................................. 235,300 1,632,469
Vodafone Group plc ................................. 2,512,958 6,470,520
Whitbread plc ...................................... 1,220 32,600
Xstrata plc ........................................ 96,000 4,101,469
-----------
60,687,187
-----------
TOTAL COMMON STOCKS
(COST $241,761,903) ............................. 320,824,268
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.4%
- --------------------------------------------------------------------------------
Investors Bank & Trust, 3.52%, purchased on
10/31/06, due 11/1/06 with a maturity
value of $7,901,801 (Collateralized
fully by various U.S. Government
Obligations) .................................... 7,901,028 7,901,028
-----------
TOTAL REPURCHASE AGREEMENTS
(COST $7,901,028) ............................... 7,901,028
-----------
- --------------------------------------------------------------------------------
RIGHTS & WARRANTS - 0.0%
- --------------------------------------------------------------------------------
UNITED KINGDOM
TI Automotive Ltd., Class A (b) .................... 190,000 0
-----------
TOTAL RIGHTS & WARRANTS
(COST $0) ....................................... 0
-----------
TOTAL INVESTMENTS
(COST $249,662,931) - 98.5% ..................... 328,725,296
===========
- ----------
Percentages indicated are based on net assets of $333,754,693.
(a) Represents non-income producing security.
(b) Illiquid security, representing 0.00% of net assets.
ADR-American Depositary Receipt
GDR-Global Depositary Receipt
95 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006 (CONTINUED)
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Aerospace & Defense .............................................. 2.2%
Automotive ....................................................... 8.9%
Banking & Financial Services ..................................... 22.7%
Building & Construction .......................................... 3.3%
Chemicals ........................................................ 1.0%
Computer Related ................................................. 0.4%
Drugs--Medical ................................................... 3.5%
Electrical ....................................................... 5.2%
Electronic Components & Semiconductors ........................... 2.6%
Food & Beverage .................................................. 0.9%
Insurance ........................................................ 7.6%
Manufacturing .................................................... 2.1%
Metals & Mining .................................................. 9.6%
Oil & Gas ........................................................ 12.8%
Publishing ....................................................... 0.7%
Real Estate ...................................................... 0.2%
Repurchase Agreement ............................................. 2.4%
Retail ........................................................... 2.0%
Telecommunications ............................................... 4.3%
Tobacco .......................................................... 2.2%
Tourism .......................................................... 0.5%
Transportation Services .......................................... 3.4%
------
Total Investments ................................................ 98.5%
------
Other assets in excess of liabilities ............................ 1.5%
------
Net Assets ....................................................... 100.0%
======
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 96
- --------------------------------------------------------------------------------
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 95.5%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
ADVERTISING - 1.5%
Monster Worldwide, Inc. (a) ........................ 87,000 3,524,370
-----------
AEROSPACE & DEFENSE - 1.7%
Esterline Technologies Corp. (a) ................... 41,800 1,575,860
Hexcel Corp. (a) ................................... 162,900 2,637,351
-----------
4,213,211
-----------
BANKING - 1.6%
East West Bancorp, Inc. ............................ 107,500 3,924,825
-----------
BIOTECHNOLOGY - 3.7%
Celgene Corp. (a) .................................. 97,400 5,205,056
Invitrogen Corp. (a) ............................... 63,200 3,666,232
-----------
8,871,288
-----------
COMMERCIAL SERVICES - 3.5%
Alliance Data Systems Corp. (a) .................... 62,500 3,795,000
Schawk, Inc., Class A .............................. 107,700 2,030,145
Sotheby's Holdings, Inc. ........................... 67,200 2,553,600
-----------
8,378,745
-----------
COMPUTER SOFTWARE - 9.4%
CheckFree Corp. (a) ................................ 94,900 3,746,652
Red Hat, Inc. (a) .................................. 148,900 2,438,982
Satyam Computer Services Ltd. ADR ................. 190,600 4,214,166
Sina Corp. (a) ..................................... 99,300 2,553,003
SRA International, Inc., ClasA (a) ................ 148,300 4,753,015
Transaction Systems Architects, Inc.,
Class A (a) ..................................... 148,700 5,012,677
-----------
22,718,495
-----------
CONSUMER PRODUCTS - 0.9%
Jarden Corp. (a) ................................... 62,600 2,252,348
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 6.5%
Actuant Corp., Class A ............................. 41,600 2,135,744
AMETEK, Inc. ....................................... 156,400 7,300,752
IDEX Corp. ......................................... 135,300 6,345,570
-----------
15,782,066
-----------
EDUCATION - 1.5%
Corinthian Colleges, Inc. (a) ...................... 304,379 3,728,643
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 11.2%
Atmel Corp. (a) .................................... 647,500 3,723,125
ATMI, Inc. (a) ..................................... 102,400 3,245,056
Cognos, Inc. (a) ................................... 192,300 7,015,104
Silicon Laboratories, Inc. (a) ..................... 57,000 1,859,910
Thermo Electron Corp. (a) .......................... 143,400 6,147,558
Varian Semiconductor Equipment Associates,
Inc. (a) ........................................ 138,050 5,037,445
-----------
27,028,198
-----------
ENVIRONMENTAL SERVICES - 1.1%
Waste Connections, Inc. (a) ........................ 63,100 2,567,539
-----------
FINANCIAL SERVICES - 4.2%
Affiliated Managers Group, Inc. (a) ................ 59,700 5,978,358
eFunds Corp. (a) ................................... 165,700 4,109,360
-----------
10,087,718
-----------
HEALTH CARE - 13.4%
Charles River Laboratories International,
Inc. (a) ........................................ 83,000 3,562,360
CYTYC Corp. (a) .................................... 145,600 3,846,752
Manor Care, Inc. ................................... 90,400 4,338,296
Omnicare, Inc. ..................................... 116,600 4,416,808
Pediatrix Medical Group, Inc. (a) .................. 78,300 3,518,019
Respironics, Inc. (a) .............................. 212,400 7,501,968
Ventana Medical Systems (a) ........................ 126,000 5,089,140
-----------
32,273,343
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
HOTELS & LODGING - 1.1%
Strategic Hotels and Resorts, Inc. ................. 121,100 2,575,797
-----------
MEDIA - 3.0%
Dreamworks Animation SKG, Inc. (a) ................. 95,500 2,525,975
Meredith Corp. ..................................... 88,800 4,662,000
-----------
7,187,975
-----------
OIL & GAS - 9.0%
Chesapeake Energy Corp. ............................ 103,500 3,357,540
Consol Energy, Inc. ................................ 86,000 3,043,540
Denbury Resources, Inc. (a) ........................ 163,200 4,690,368
Grant Prideco, Inc. (a) ............................ 86,500 3,267,105
Massey Energy Co. .................................. 148,300 3,744,575
Smith International, Inc. .......................... 92,600 3,655,848
-----------
21,758,976
-----------
PHARMACEUTICALS - 10.0%
Alexion Pharmaceuticals, Inc. (a) .................. 68,104 2,544,365
Elan Corp. PLC ADR (a) ............................. 438,300 6,346,584
MGI Pharma, Inc. (a) ............................... 213,000 4,053,390
OSI Pharmaceuticals, Inc. (a) ...................... 217,100 8,310,588
Santarus, Inc. (a) ................................. 384,400 2,956,036
-----------
24,210,963
-----------
REAL ESTATE - 0.4%
Northstar Realty Finance Corp. ..................... 62,000 939,300
-----------
RETAIL - 6.2%
Advance Auto Parts, Inc. ........................... 6,500 227,630
Dick's Sporting Goods, Inc. (a) .................... 105,800 5,264,608
P.F. Chang's China Bistro, Inc. (a) ................ 38,900 1,626,798
PETsMART, Inc. ..................................... 144,200 4,150,076
Williams-Sonoma, Inc. .............................. 108,400 3,686,684
-----------
14,955,796
-----------
TELECOMMUNICATIONS - 3.7%
Comverse Technology, Inc. (a) ...................... 117,300 2,553,621
Polycom, Inc. (a) .................................. 236,700 6,485,580
-----------
9,039,201
-----------
TRANSPORTATION - 1.9%
J.B. Hunt Transport Services, Inc. ................. 210,200 4,548,728
-----------
TOTAL COMMON STOCKS
(COST $189,713,278) ............................. 230,567,525
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 5.5%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
HSBC Investor Money Market Fund Class I
Shares, 5.23% (b)* .............................. 13,240,979 13,240,979
-----------
TOTAL INVESTMENT COMPANIES
(COST $13,240,979) .............................. 13,240,979
-----------
TOTAL INVESTMENTS
(COST $202,954,257) - 101.0% .................... 243,808,504
===========
- ----------
Percentages indicated are based on net assets of $241,494,843.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
ADR-American Depository Receipt
97 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--OCTOBER 31, 2006
- --------------------------------------------------------------------------------
COMMON STOCKS - 93.1%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AEROSPACE & DEFENSE - 4.6%
Lockheed Martin Corp. .............................. 19,400 1,686,442
Raytheon Co. ....................................... 28,300 1,413,585
-----------
3,100,027
-----------
BANKING - 4.7%
Bank of America Corp. .............................. 23,600 1,271,332
Wells Fargo & Co. .................................. 51,600 1,872,564
-----------
3,143,896
-----------
BUSINESS SERVICES - 2.9%
Pitney Bowes, Inc. ................................. 42,100 1,966,491
-----------
COMPUTER SOFTWARE - 6.4%
CA, Inc. ........................................... 110,800 2,743,408
Microsoft Corp. .................................... 54,300 1,558,953
-----------
4,302,361
-----------
CONGLOMERATES - 1.9%
Loews Corp. ........................................ 33,600 1,307,712
-----------
CONSUMER PRODUCTS - 7.7%
Altria Group, Inc. ................................. 35,700 2,903,481
Kimberly-Clark Corp. ............................... 27,000 1,796,040
Tyson Foods, Inc., Class A ......................... 34,200 494,190
-----------
5,193,711
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -1.6%
Ingersoll-Rand Co., Class A ....................... 29,800 1,093,958
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.3%
Agilent Technologies, Inc. (a) ..................... 24,564 874,478
-----------
FINANCIAL SERVICES - 16.6%
Citigroup, Inc. .................................... 36,707 1,841,223
Countrywide Financial Corp. ........................ 76,600 2,919,993
Fannie Mae ......................................... 41,500 2,459,290
Genworth Financial, Inc., Class A .................. 50,900 1,702,096
J.P. Morgan Chase & Co. ............................ 34,150 1,620,076
MGIC Investment Corp. .............................. 11,800 693,368
-----------
11,236,046
-----------
GAS & ELECTRIC UTILITY - 2.0%
Dominion Resources, Inc. ........................... 17,000 1,376,830
-----------
INSURANCE - 8.1%
Aetna, Inc. ........................................ 16,600 684,252
AON Corp. .......................................... 46,400 1,614,256
Radian Group, Inc. ................................. 17,400 927,420
The Hartford Financial Services Group, Inc. ........ 25,700 2,240,269
-----------
5,466,197
-----------
MEDIA - 11.2%
CBS Corp., Class B ................................. 33,050 956,467
Clear Channel Communications, Inc. ................. 33,500 1,167,475
Comcast Corp., Special Class A (a) ................. 42,300 1,712,304
Liberty Media Capital Group, Class A (a) .......... 5,017 446,814
Liberty Media Interactive Group, Class A (a) ....... 37,087 818,510
Viacom Inc., Class B (a) ........................... 63,800 2,483,096
-----------
7,584,666
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
METALS & MINING - 6.2%
Barrick Gold Corp. ................................. 62,700 1,943,700
POSCO ADR .......................................... 11,800 832,136
Rio Tinto PLC ADR .................................. 2,900 642,031
United States Steel Corp. .......................... 10,900 736,840
-----------
4,154,707
-----------
OIL & GAS - 7.4%
Apache Corp. ....................................... 12,200 796,904
ConocoPhillips ..................................... 16,271 980,165
Noble Energy, Inc. ................................. 65,500 3,185,265
-----------
4,962,334
-----------
PAPER PRODUCTS - 1.3%
International Paper Co. ............................ 26,800 893,780
-----------
TELECOMMUNICATIONS - 7.4%
AT&T, Inc. ......................................... 44,900 1,537,825
BellSouth Corp. .................................... 21,050 949,355
Motorola, Inc. ..................................... 70,200 1,618,812
Sprint Nextel Corp. ................................ 45,600 852,264
-----------
4,958,256
-----------
TRANSPORTATION - 1.8%
Union Pacific Corp. ................................ 13,200 1,196,316
-----------
TOTAL COMMON STOCKS
(COST $50,318,029) .............................. 62,811,766
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 6.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
HSBC Investor Money Market Fund
Class I Shares, 5.23% (b)* ...................... 4,508,066 4,508,066
-----------
TOTAL INVESTMENT COMPANIES
(COST $4,508,066) ............................... 4,508,066
-----------
- --------------------------------------------------------------------------------
RIGHTS AND WARRANTS - 0.1%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE
Raytheon Co., 37.5 strike price, expires
6/16/11 (a) ..................................... 4,833 75,975
-----------
TOTAL RIGHTS AND WARRANTS
(COST $0) ....................................... 75,975
-----------
TOTAL INVESTMENTS
(COST $54,826,095) - 99.9% ...................... 67,395,807
===========
- ----------
Percentages indicated are based on net assets of $67,432,095.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2006.
* Investment in affiliate.
ADR-American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS HSBC INVESTOR PORTFOLIOS 98
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--OCTOBER 31, 2006
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in non-affiliates, at value $123,095,860 $ 12,576,265 $ 21,227,401 $58,005,419 $ 328,725,296
Investments in affiliates, at value 2,998,076 -- 634,275 2,114,763 --
Cash -- 16 -- -- 44,591
Foreign currency -- -- -- -- 2,125,252
Interest and dividends receivable 989,785 261,881 155,141 50,388 636,904
Receivable for investments sold 13,281,508 32,289 2,026,784 142,543 2,718,203
Unrealized appreciation on forward foreign
currency contracts 2,472 -- 469 -- --
Prepaid expenses and other assets 1,698 301 490 774 4,559
------------ ------------ ------------ ----------- -------------
TOTAL ASSETS 140,369,399 12,870,752 24,044,560 60,313,887 334,254,805
------------ ------------ ------------ ----------- -------------
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 29,121,190 135,219 4,517,975 457,514 192,318
Unrealized depreciation on forward foreign
currency contracts 2,232 -- 443 -- --
Accrued expenses and other liabilities:
Investment management 44,042 6,316 6,626 24,589 238,047
Administration 6,794 404 1,822 1,966 14,078
Accounting -- -- -- 388 --
Compliance service 1 -- -- -- --
Custodian -- 9,975 516 -- 46,608
Trustee 167 17 34 83 465
Other 3,042 56 576 1,583 8,596
------------ ------------ ------------ ----------- -------------
TOTAL LIABILITIES 29,177,468 151,987 4,527,992 486,123 500,112
------------ ------------ ------------ ----------- -------------
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Applicable to investors' beneficial interest $111,191,931 $ 12,718,765 $ 19,516,568 $59,827,764 $ 333,754,693
============ ============ ============ =========== =============
Total Investments, at cost $125,181,696 $ 12,509,676 $ 21,764,574 $54,512,963 $ 249,662,931
============ ============ ============ =========== =============
Foreign currency, at cost $ 2,091,355
=============
99 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--OCTOBER 31, 2006 (CONTINUED)
SMALL CAP
EQUITY VALUE
PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------
ASSETS:
Investments in non-affiliates, at value $230,567,525 $62,887,741
Investments in affiliates, at value 13,240,979 4,508,066
Cash 4,765 --
Interest and dividends receivable 61,218 69,383
Receivable for investments sold 4,265,643 --
Prepaid expenses and other assets 7,919 805
------------ -----------
TOTAL ASSETS 248,148,049 67,465,995
------------ -----------
- ---------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 6,470,680 --
Accrued expenses and other liabilities:
Investment management 163,675 29,600
Administration 12,040 2,202
Accounting 114 200
Trustee 329 95
Other 6,368 1,803
------------ -----------
TOTAL LIABILITIES 6,653,206 33,900
------------ -----------
- ---------------------------------------------------------------------------
NET ASSETS:
Applicable to investors' beneficial interest $241,494,843 $67,432,095
============ ===========
Total Investments, at cost $202,954,257 $54,826,095
============ ===========
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 100
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2006
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO (a) PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 6,074,170 $ 764,816 $ 1,208,927 $ 1 $ 134,644
Dividends -- 10,683 -- 499,254 9,042,924
Dividend income from affiliated investments 97,176 -- 26,213 95,644 --
Foreign tax withholding -- -- -- -- (974,388)
Income from securities lending 17,878 -- 3,075 19 --
------------ ------------- ------------ ----------- -------------
TOTAL INVESTMENT INCOME 6,189,224 775,499 1,238,215 594,918 8,203,180
------------ ------------- ------------ ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment management 521,319 56,612 92,601 274,052 1,905,467
Administration 41,473 3,535 8,677 20,859 106,142
Accounting 65,688 57,056 59,562 52,882 92,992
Compliance service 1,593 131 341 789 3,930
Custodian 45,750 57,077 13,418 25,798 276,849
Interest 4,939 -- -- -- --
Trustee 3,105 217 689 1,477 7,462
Other 18,240 1,101 4,014 8,815 42,574
------------ ------------- ------------ ----------- -------------
TOTAL EXPENSES 702,107 175,729 179,302 384,672 2,435,416
------------ ------------- ------------ ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 5,487,117 599,770 1,058,913 210,246 5,767,764
------------ ------------- ------------ ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments
and foreign currency transactions (2,015,195) 36,553 (458,266) 3,913,855 31,508,299
Change in unrealized appreciation/depreciation
from investments and foreign currencies 2,496,112 66,589 518,623 (380,204) 39,700,669
------------ ------------- ------------ ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from
investments and foreign currency
transactions 480,917 103,142 60,357 3,533,651 71,208,968
------------ ------------- ------------ ----------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,968,034 $ 702,912 $ 1,119,270 $ 3,743,897 $ 76,976,732
============ ============= ============ =========== =============
(a) The High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
101 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2006 (CONTINUED)
SMALL CAP
EQUITY VALUE
PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 947,741 $ 1,051,111
Dividend income from affiliated investments 244,837 115,771
Income from securities lending 7,230 113
------------ ------------
TOTAL INVESTMENT INCOME 1,199,808 1,166,995
------------ ------------
- ----------------------------------------------------------------------------------
EXPENSES:
Investment management 1,868,748 316,677
Administration 87,545 22,605
Accounting 53,770 52,651
Compliance service 3,296 849
Custodian 86,396 21,762
Trustee 6,294 1,607
Other 31,376 9,827
------------ ------------
TOTAL EXPENSES 2,137,425 425,978
------------ ------------
- ----------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (937,617) 741,017
------------ ------------
- ----------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments
and foreign currency transactions 38,504,562 5,586,911
Change in unrealized appreciation/depreciation
from investments and foreign currencies 3,658,201 5,704,297
------------ ------------
- ----------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from
investments and foreign currency transactions 42,162,763 11,291,208
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 41,225,146 $ 12,032,225
============ ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 102
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
CORE PLUS HIGH YIELD
FIXED INCOME FIXED INCOME
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 (a)
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 5,487,117 $ 6,493,010 $ 599,770
Net realized gains (losses) from investment and
foreign currency transactions (2,015,195) 7,083,274 36,553
Change in unrealized appreciation/depreciation
from investments and foreign currencies 2,496,112 (10,643,468) 66,589
---------------- ---------------- --------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 5,968,034 2,932,816 702,912
---------------- ---------------- --------------------
Proceeds from contributions 23,850,640 31,409,368 13,667,509
Value of withdrawals (41,156,523) (81,271,788) (1,651,656)
---------------- ---------------- --------------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST (17,305,883) (49,862,420) 12,015,853
---------------- ---------------- --------------------
CHANGE IN NET ASSETS (11,337,849) (46,929,604) 12,718,765
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 122,529,780 169,459,384 --
---------------- ---------------- --------------------
End of period $ 111,191,931 $ 122,529,780 $ 12,718,765
================ ================ ====================
- ----------
(a) The High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
103 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERMEDIATE DURATION
FIXED INCOME
PORTFOLIO
- -------------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005
- -------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,058,913 $ 1,897,871
Net realized gains (losses) from investment and
foreign currency transactions (458,266) (162,231)
Change in unrealized appreciation/depreciation
from investments and foreign currencies 518,623 (1,247,772)
---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,119,270 487,868
---------------- ----------------
Proceeds from contributions 1,801,738 6,926,443
Value of withdrawals (16,214,126) (38,301,414)
---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST (14,412,388) (31,374,971)
---------------- ----------------
CHANGE IN NET ASSETS (13,293,118) (30,887,103)
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 32,809,686 63,696,789
---------------- ----------------
End of period $ 19,516,568 $ 32,809,686
================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 104
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 210,246 $ 403,238 $ 5,767,764 $ 4,381,037
Net realized gains (losses) from
investment and foreign currency
transactions 3,913,855 2,375,542 31,508,299 18,977,305
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (380,204) 3,995,556 39,700,669 17,737,274
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 3,743,897 6,774,336 76,976,732 41,095,616
---------------- ---------------- ---------------- ----------------
Proceeds from contributions 15,350,040 15,081,868 62,831,133 68,931,727
Value of withdrawals (8,680,872) (22,121,709) (36,283,024) (99,822,646)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST 6,669,168 (7,039,841) 26,548,109 (30,890,919)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 10,413,065 (265,505) 103,524,841 10,204,697
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 49,414,699 49,680,204 230,229,852 220,025,155
---------------- ---------------- ---------------- ----------------
End of period $ 59,827,764 $ 49,414,699 $ 333,754,693 $ 230,229,852
================ ================ ================ ================
105 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SMALL CAP EQUITY VALUE
PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2006 OCTOBER 31, 2005 OCTOBER 31, 2006 OCTOBER 31, 2005
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (937,617) $ (1,294,078) $ 741,017 $ 721,613
Net realized gains (losses) from
investment transactions 38,504,562 62,035,547 5,586,911 4,124,126
Change in unrealized
appreciation/depreciation from
investments 3,658,201 (17,237,446) 5,704,297 4,254,259
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 41,225,146 43,504,023 12,032,225 9,099,998
---------------- ---------------- ---------------- ----------------
Proceeds from contributions 22,244,597 24,917,377 13,285,641 14,013,050
Value of withdrawals (a) (40,753,125) (208,976,448) (12,036,219) (30,376,597)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST (18,508,528) (184,059,071) 1,249,422 (16,363,547)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 22,716,618 (140,555,048) 13,281,647 (7,263,549)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 218,778,225 359,333,273 54,150,448 61,413,997
---------------- ---------------- ---------------- ----------------
End of period $ 241,494,843 $ 218,778,225 $ 67,432,095 $ 54,150,448
================ ================ ================ ================
- ----------
(a) During the year ended October 31, 2005, the Small Cap Equity Portfolio
delivered cash and securities with a market value of $61,810,186 in
connection with a redemption in-kind of the HSBC Investor Small Cap Equity
Fund.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 106
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET ASSETS AT EXPENSES INVESTMENT RATIO OF
END OF TO AVERAGE INCOME (LOSS) EXPENSES
TOTAL PERIOD NET TO AVERAGE TO AVERAGE PORTFOLIO
RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) NET ASSETS(b)(c) TURNOVER(a)
- -----------------------------------------------------------------------------------------------------------------------
CORE PLUS FIXED INCOME PORTFOLIO
Year ended October 31, 2002 $385,802 0.48% 5.14% 0.48% 77.82%
Year ended October 31, 2003 5.80% 203,551 0.48% 4.38% 0.48% 70.91%
Year ended October 31, 2004 5.56% 169,459 0.52% 4.31% 0.52% 34.88%
Year ended October 31, 2005 1.64% (d) 122,530 0.40% (d) 4.25% (d) 0.53% 176.60%
Year ended October 31, 2006 5.55% 111,192 0.63% 4.96% 0.63% 273.91%
- -----------------------------------------------------------------------------------------------------------------------
HIGH YIELD FIXED INCOME PORTFOLIO
Period ended October 31, 2006 (e) 7.41% $ 12,719 1.86% 6.33% 1.86% 13.61%
- -----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE DURATION FIXED
INCOME PORTFOLIO
Year ended October 31, 2002 $149,815 0.51% 4.60% 0.51% 44.04%
Year ended October 31, 2003 4.42% 84,488 0.53% 3.70% 0.53% 98.42%
Year ended October 31, 2004 4.48% 63,697 0.57% 3.54% 0.57% 50.06%
Year ended October 31, 2005 0.76% (d) 32,810 0.49% (d) 3.85% (d) 0.58% 107.26%
Year ended October 31, 2006 5.29% 19,517 0.78% 4.58% 0.78% 236.51%
- -----------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Period ended October 31, 2004 (e) (0.86%) $ 49,680 0.72% 0.06% 0.72% 53.08%
Year ended October 31, 2005 13.59% (d) 49,415 0.63% (d) 0.77% (d) 0.68% 79.54%
Year ended October 31, 2006 7.53% 59,828 0.69% 0.38% 0.69% 75.06%
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
Year ended October 31, 2002 $256,616 0.91% 0.63% 0.91% 31.63%
Year ended October 31, 2003 23.70% 201,805 0.96% 1.00% 0.96% 68.51%
Year ended October 31, 2004 20.29% 220,025 0.94% 1.53% 0.94% 106.11%
Year ended October 31, 2005 19.54% 230,230 0.84% 1.92% 0.84% 31.32%
Year ended October 31, 2006 32.79% 333,755 0.86% 2.03% 0.86% 33.39%
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY PORTFOLIO
Year ended October 31, 2002 $266,217 0.99% (0.78%) 0.99% 103.90%
Year ended October 31, 2003 33.30% 426,181 0.91% (0.62%) 0.91% 152.05%
Year ended October 31, 2004 5.93% 359,333 0.88% (0.52%) 0.88% 81.75%
Year ended October 31, 2005 14.35% (d) 218,778 0.85% (d) (0.45%) (d) 0.90% 63.95%
Year ended October 31, 2006 19.54% 241,495 0.91% (0.40%) 0.91% 60.83%
- -----------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO
Period ended October 31, 2004 (e) 6.12% $ 61,414 0.71% 1.28% 0.71% 10.33%
Year ended October 31, 2005 15.23% (d) 54,150 0.64% (d) 1.15% (d) 0.69% 16.45%
Year ended October 31, 2006 22.21% 67,432 0.71% 1.23% 0.71% 20.63%
- -----------------------------------------------------------------------------------------------------------------------
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) During the period, certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Portfolios related to violations of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.12%, 0.09%, 0.05%, 0.04% and 0.05% for the
Core Plus Fixed Income Portfolio, Intermediate Duration Fixed Income
Portfolio, Growth Portfolio, Small Cap Equity Portfolio and Value
Portfolio, respectively.
(e) High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
Growth Portfolio commenced operations on May 7, 2004.
Value Portfolio commenced operations on May 7, 2004.
107 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006
1. ORGANIZATION:
The HSBC Investor Portfolios (the "Portfolio Trust"), is an open-end
management investment company organized as a New York trust under the laws
of the State of New York on November 1, 1994. The Portfolio Trust contains
the following master funds (individually a "Portfolio," collectively the
"Portfolios"):
PORTFOLIO SHORT NAME
- --------- ----------
HSBC Investor Core Plus Fixed Income Portfolio Core Plus Fixed Income Portfolio
(formerly the HSBC Investor Fixed Income Portfolio)
HSBC Investor High Yield Fixed Income Portfolio High Yield Fixed Income Portfolio
HSBC Investor Intermediate Duration Fixed Intermediate Duration Fixed Income Portfolio
Income Portfolio (formerly the HSBC Investor
Limited Maturity Portfolio)
HSBC Investor Growth Portfolio Growth Portfolio
HSBC Investor International Equity Portfolio International Equity Portfolio
HSBC Investor Small Cap Equity Portfolio Small Cap Equity Portfolio
HSBC Investor Value Portfolio Value Portfolio
The Portfolios operate as master funds in master-feeder
arrangements, in which other funds invest their assets in the Portfolios.
The Declaration of Trust permits the Board of Trustees to issue an
unlimited number of beneficial interests in the Portfolios.
The Portfolios are diversified series of the Portfolio Trust and are
part of the HSBC Investor Family of Funds. Financial Statements for all
other funds of the HSBC Investor Family of Funds are published separately.
Under the Portfolio Trust's organizational documents, the
Portfolios' officers and trustees are indemnified against certain
liabilities arising out of the performance of their duties to the
Portfolios. In addition, in the normal course of business, the Portfolios
enter into contracts with their service providers, which also provide for
indemnifications by the Portfolios. The Portfolios' maximum exposure under
these arrangements is unknown as this would involve any future claims that
may be made against the Portfolios. However, based on experience, the
Portfolios expect that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Portfolios in the preparation of their financial
statements. The policies are in conformity with accounting principles
generally accepted in the United States of America ("GAAP"). The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for
the period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of
valuations furnished by a pricing service, the use of which has been
approved by the Portfolios' Board of Trustees. In making such valuations,
the pricing service utilizes both dealer-supplied valuations and the use
of matrix techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
other than market data and without exclusive reliance upon quoted prices
or exchanges or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. All
debt portfolio securities with a remaining maturity of 60 days or less are
valued at amortized cost. Under the amortized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
The value of each equity security is based either on the last sale
price on a national securities exchange, or in the absence of recorded
sales, at the closing bid prices on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities or other assets for which
market quotations are not readily available, or are deemed unreliable due
to
HSBC INVESTOR PORTFOLIOS 108
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
a significant event or otherwise, are valued by or at the direction of the
Portfolios' Board of Trustees. Examples of potentially significant events
that could affect the value of an individual security include corporate
actions by the issuer, announcements by the issuer relating to its
earnings or products, regulatory news, natural disasters and litigation.
Examples of potentially significant events that could affect multiple
securities held by a Portfolio include governmental actions, natural
disasters and armed conflicts. In addition, if events materially affecting
the value of foreign securities occur between the time when the exchange
on which they are traded closes and the time when the Portfolios' net
assets are calculated, such securities may be valued using fair value
pricing in accordance with procedures adopted by the Board of Trustees.
Management identifies possible fluctuations in foreign securities by
monitoring the rise or fall in the value of a designated benchmark index.
In the event of a rise or fall greater than predetermined levels, the
International Equity Portfolio may use a systematic valuation model
provided by an independent third party to value its foreign securities,
rather than local market closing prices. When the International Equity
Portfolio uses such a valuation model, the value assigned to the
International Equity Portfolio's foreign securities may not be the quoted
or published prices of the investment on their primary markets or
exchanges.
SECURITIES TRANSACTIONS AND RELATED INCOME:
During the period, security transactions are accounted for no later
than one business day following trade date. For financial reporting
purposes, however, changes in holdings are accounted for on trade date on
the last business day of the reporting period. Securities gains and losses
are calculated on the identified cost basis. Interest income is recognized
on the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the Portfolios are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at the
current rate of exchange to determine the value of investments, assets and
liabilities. Purchases and sales of securities, and income and expenses
are translated at the prevailing rate of exchange on the respective dates
of such transactions. The Portfolios do not isolate the portion of the
results of operations resulting from changes in foreign exchange rates on
investments from fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments and foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
The Portfolios may enter into forward foreign currency exchange
contracts in connection with planned purchases or sales of securities or
to hedge the U.S. dollar value of portfolio securities denominated in a
particular currency. The Portfolios could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the
underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized gains or losses until the contract
settlement date.
FUTURES CONTRACTS:
Each Portfolio may invest in futures contracts for the purpose of
hedging their existing portfolio securities or securities it intends to
purchase against fluctuations in fair value caused by changes in
prevailing market interest rates. Upon entering into a futures contract,
the Portfolio is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount (initial
margin deposit). Subsequent payments, known as "variation margin," are
made or received by the Portfolio each day, depending on the daily
fluctuations in the fair value of the underlying security. The Portfolio
recognizes a gain or loss equal to the daily variation margin. Should
market conditions move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the futures contracts and may realize a loss. The
use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the
underlying hedged assets.
109 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
MORTGAGE DOLLAR ROLL TRANSACTIONS:
The Core Plus Fixed Income Portfolio, the High Yield Fixed Income
Portfolio and the Intermediate Duration Fixed Income Portfolio may engage
in dollar roll transactions with respect to mortgage securities issued by
the Government National Mortgage Association, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation. In a
dollar roll transaction, the Portfolio sells a mortgage-backed security
and simultaneously agrees to repurchase a similar security on a specified
future date at an agreed upon price. During the roll period, the Portfolio
will not be entitled to receive any interest or principal paid on the
securities sold. The Portfolio is compensated for the lost interest on the
securities sold by the difference between the sales price and the lower
price for the future repurchase as well as by the interest earned on the
reinvestment of the sales proceeds. The Portfolio may also be compensated
by receipt of a commitment fee.
RESTRICTED AND ILLIQUID SECURITIES:
A restricted security is a security which has been purchased through
a private offering and cannot be resold to the general public without
prior registration under the Securities Act of 1933 (the "1933 Act") or
pursuant to the resale limitations provided by Rule 144 under the 1933
Act, or an exemption from the registration requirements of the 1933 Act.
Certain restricted securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers, and may be
deemed liquid by the investment adviser based on procedures established by
the Board of Trustees. Therefore, not all restricted securities are
considered illiquid. At October 31, 2006 the HSBC Core Plus Fixed Income
Portfolio held restricted securities that were illiquid, representing
0.03% of net assets, as follows:
ACQUISITION ACQUISITION PRINCIPAL
SECURITY NAME DATE COST($) AMOUNT($) VALUE($)
- ------------- ----------- ----------- ---------- --------
FHA Weyerhauser, 7.43%, 1/1/24 3/28/2002 32,060 33,926 33,926
SECURITY LOANS:
To generate additional income, the Portfolios may lend portfolio
securities in amounts up to 33 1/3%, except for the Small Cap Equity
Portfolio, which may lend up to 30%, of its respective assets pursuant to
agreements requiring that the loan be collateralized by cash, U.S.
Government or U.S. Government agency securities, equal at all times to at
least 100% of the fair value of the loaned securities. HSBC Bank USA
("HSBC Bank"), an affiliate of the Investment Adviser (defined below),
acted as the securities lending agent for this activity through March 30,
2006. The Portfolios receive payments from borrowers equivalent to the
dividends and interest that would have been earned on securities loaned
while simultaneously seeking to earn income on the investment of
collateral. Collateral is marked to market daily to provide the required
level of collateral. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of
the securities fail financially. However, loans will be made only to
borrowers, such as broker-dealers, banks or institutional borrowers of
securities, deemed by HSBC Bank to be of good standing and creditworthy
under guidelines approved by the Board of Trustees and when, in the
judgment of HSBC Bank, the amounts that can be earned currently from such
securities loans justifies the attendant risks. Loans are subject to
termination by the Portfolios or the borrower at any time and are,
therefore, not considered to be illiquid investments. As of October 31,
2006 the Portfolios did not have any securities on loan.
REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements with an entity which
is a member of the Federal Reserve System or which is a "primary dealer"
(as designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The repurchase price generally equals the price paid by a
Portfolio plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller, under a repurchase agreement, is required to
maintain the collateral held pursuant to the agreement, with a fair value
equal to or greater than the repurchase price (including accrued
interest). Collateral subject to repurchase agreements is held by the
Portfolios' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. In the event of counterparty default,
the Portfolio has the right to use the collateral to offset losses
incurred. There is potential for loss to the Portfolio in the event the
Portfolio is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the
fair value of the underlying securities during the period while the
Portfolio seeks to assert its rights.
HSBC INVESTOR PORTFOLIOS 110
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
LINE OF CREDIT:
The Portfolios may borrow up to $50 million under the terms of a
short-term, demand note agreement with HSBC Bank. The purpose of the
agreement is to meet temporary or emergency cash needs, including
redemption requests that might otherwise require the untimely disposition
of securities.
During the year ended October 31, 2006, the details of the
borrowings were as follows (based on actual number of days in which the
respective Portfolios borrowed monies):
AVERAGE AMOUNT AVERAGE
FUND OUTSTANDING INTEREST RATE
---- -------------- --------------
Core Plus Fixed Income Portfolio $7,732,592 4.60%
EXPENSE ALLOCATIONS:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Expenses not directly attributable to a Portfolio are allocated
proportionally among various or all funds within the HSBC Investor Family
of Funds in relation to net assets or on another reasonable basis.
FEDERAL INCOME TAXES:
Each Portfolio will be treated as a partnership for U.S. Federal
income tax purposes. Accordingly, each Portfolio passes through all of its
net investment income and gains and losses to its feeder funds, and is
therefore not subject to U.S. Federal income tax. As such, investors in
the Portfolios will be taxed on their respective share of the Portfolios'
ordinary income and realized gains. It is intended that the Portfolios
will be managed in such a way that an investor will be able to satisfy the
requirements of the Internal Revenue Code applicable to regulated
investment companies.
NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006 the Financial Accounting Standards Board (FASB)
issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair
Value Measurements." This standard establishes a single authoritative
definition of fair value, sets out a framework for measuring fair value
and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted
by existing standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The changes to current GAAP from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about
fair value measurements. As of October 31, 2006, the Portfolios do not
believe the adoption of SFAS No. 157 will impact the financial statement
amounts, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the
measurements on changes in net assets for the period.
On July 13, 2006, the FASB released FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Portfolios' tax return to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable
tax authority. Tax positions not deemed to meet the more likely-than-not
threshold would be recorded as a tax benefit or expense in the year of
determination. Adoption of FIN 48 is required for fiscal years beginning
after December 15, 2006 and is to be applied to all open tax years as of
the effective date. Management is in the process of completing their
analysis on whether the adoption of FIN 48 will have an impact to the
financial statements upon adoption.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as the Investment Adviser to the Portfolios pursuant to an investment
management contract with the Portfolio Trust. As Investment Adviser, HSBC
manages the investments of the Portfolios and continuously reviews,
supervises and administers the Portfolios' investments, except that
Waddell &
111 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
Reed Investment Management Company, AllianceBernstein Investment Research
and Management, Westfield Capital Management, LLC and NWQ Investment
Management Co., LLC serve as sub-investment advisers for the Growth
Portfolio, International Equity Portfolio, Small Cap Equity Portfolio and
the Value Portfolio, respectively, and are paid for their services
directly by the respective Portfolios.
For its services, the Investment Adviser receives a fee, accrued
daily and paid monthly, at an annual rate of 0.60% of the High Yield Fixed
Income Portfolio's average daily net assets and 0.40% of the Intermediate
Duration Fixed Income Portfolio's average daily net assets.
For its services as Investment Adviser, HSBC receives, from the Core
Plus Fixed Income Portfolio, a fee accrued daily and paid monthly at an
annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $50 million ................................................................. 0.575%
In excess of $50 million but not exceeding $95 million ............................ 0.450%
In excess of $95 million but not exceeding $150 million ........................... 0.200%
In excess of $150 million but not exceeding $250 million .......................... 0.400%
In excess of $250 million ......................................................... 0.350%
For their services, the Investment Adviser and Waddell & Reed
Investment Management Company receive in aggregate, from the Growth
Portfolio, a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $50 million ................................................................. 0.500%
In excess of $50 million but not exceeding $100 million ........................... 0.425%
In excess of $100 million but not exceeding $200 million .......................... 0.375%
In excess of $200 million ......................................................... 0.325%
For their services, the Investment Adviser and AllianceBernstein
Investment Research and Management receive in aggregate, from the
International Equity Portfolio, a fee, accrued daily and paid monthly, at
an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $10 million ................................................................. 1.015%
In excess of $10 million but not exceeding $25 million ............................ 0.925%
In excess of $25 million but not exceeding $50 million ............................ 0.79%
In excess of $50 million but not exceeding $100 million ........................... 0.70%
In excess of $100 million ......................................................... 0.61%
For their services, the Investment Adviser and Westfield Capital
Management, LLC receive in aggregate, a fee, accrued daily and paid
monthly, at an annual rate of 0.80% of the Small Cap Equity Portfolio's
average daily net assets.
For their services, the Investment Adviser and NWQ Investment
Management Co., LLC receive in aggregate, from the Value Portfolio, a fee,
accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $500 million ................................................................ 0.525%
In excess of $500 million but not exceeding $1 billion ............................ 0.475%
In excess of $1 billion ........................................................... 0.425%
ADMINISTRATION:
HSBC serves the Portfolios as Administrator. Under the terms of the
administration agreement, HSBC receives from the Portfolios a fee, accrued
daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $8 billion .................................................................. 0.075%
In excess of $8 billion but not exceeding $9.25 billion ........................... 0.070%
In excess of $9.25 billion but not exceeding $12 billion .......................... 0.050%
In excess of $12 billion .......................................................... 0.030%
HSBC INVESTOR PORTFOLIOS 112
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
The fee rates and breakpoints are determined on the basis of the
aggregate average daily net assets of the HSBC Investor Family of Funds,
however, the assets of the Portfolios and Feeder Funds that invest in the
Portfolios are not double-counted. The total administration fee paid to
BISYS is allocated to each series in the HSBC Investor Family of Funds
based upon its proportionate share of the aggregate net assets of the
Family of Funds. For assets invested in the Portfolios by Feeder Funds,
the Portfolios pay half of the administration fee and the Feeder Funds pay
half of the administration fee, for a combination of the total fee rate
set forth above.
Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund
Services Ohio, Inc. ("BISYS Ohio"), a wholly-owned subsidiary of The BISYS
Group, Inc., serves as the Portfolio Trust's sub-administrator subject to
the general supervision of the Portfolio Trust's Board of Trustees and
HSBC. For these services, BISYS Ohio is entitled to a fee, payable by
HSBC, at an annual rate equivalent to the fee rates set forth above, minus
0.02% (2 basis points) which is retained by HSBC.
Under a Compliance Services Agreement between the Portfolios' and
BISYS Ohio (the "CCO Agreement"), BISYS Ohio makes an employee available
to serve as the Portfolios' Chief Compliance Officer (the "CCO"). Under
the CCO Agreement, BISYS Ohio also provides infrastructure and support in
implementing the written policies and procedures comprising the
Portfolios' compliance program, including support services to the CCO. For
the services provided under the CCO Agreement, the HSBC Investor Family of
Funds paid BISYS Ohio $240,000 for the year ended October 31, 2006, plus
reimbursement of certain expenses. Expenses incurred by each Portfolio are
reflected on the Statements of Operations as "Compliance Service". BISYS
Ohio pays the salary and other compensation earned by any such individuals
as employees of BISYS Ohio.
FUND ACCOUNTING, CUSTODIAN AND TRUSTEE:
BISYS Ohio provides fund accounting services for the Portfolios. For
its services to the Portfolios, BISYS Ohio receives an annual fee per
Portfolio, including reimbursement of certain expenses, that is accrued
daily and paid monthly.
Investor's Bank & Trust Company ("IBT") serves as custodian for the
High Yield Fixed Income Portfolio and the International Equity Portfolio.
HSBC Bank serves as custodian to all the other Portfolios. Compensation
paid to IBT and HSBC Bank for services to the Portfolios as custodian is
presented in the Statements of Operations as custodian fees.
Effective May 18, 2006 each of the six non-interested Trustees are
compensated with a $35,000 annual Board retainer, as well as a $3,000
annual retainer for each Committee of the Board. Each non-interested
Trustee also receives a $5,000 and $3,000 meeting fee for each regular
in-person Board meeting and Committee meeting, respectively. Furthermore,
each non-interested Trustee receives compensation for attending special
meetings and/or functioning as a Committee Chairperson or Lead Trustee. In
addition, the non-interested Trustees are reimbursed for certain expenses
incurred in connection with their Board membership. Prior to May 18, 2006
each of the six non-interested Trustees were compensated with a $24,000
annual Board retainer, as well as a $1,000 annual retainer for each
Committee of the Board. Each non-interested Trustee also received a $4,000
and $2,000 meeting fee for each regular in-person Board meeting and
Committee meeting, respectively.
OTHER:
For its services as securities lending agent, HSBC Bank (see note
2--Security Loans) received a fee equal to 0.06% of the average dollar
value of the loans outstanding from the Portfolios. Income from securities
lending, net of related expenses, is recorded as earned by the Portfolios.
The fees collected by HSBC Bank for the period ended October 31, 2006
were:
PORTFOLIO FEE
--------- ------
Core Plus Fixed Income Portfolio ................................. $ 940
Intermediate Duration Fixed Income Portfolio ..................... 161
Growth Portfolio ................................................. 38
Small Cap Equity Portfolio ....................................... 7,966
Value Portfolio .................................................. 188
113 HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--OCTOBER 31, 2006 (CONTINUED)
The HSBC Investor Family of Funds may use affiliated broker/dealers
for the execution of portfolio investment trades. For the year ended
October 31, 2006, affiliated broker/dealers received $31 in commissions on
the execution of trades related to the HSBC Investor Family of Funds.
4. INVESTMENT TRANSACTIONS:
For the year ended October 31, 2006, each Portfolio purchased and
sold securities, excluding short-term securities, in the following
amounts:
PURCHASES SALES PURCHASES SALES
(EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S.
PORTFOLIO NAME GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT
- -------------- --------------- --------------- ------------ ------------
Core Plus Fixed Income Portfolio .............. $ 134,526,696 $ 172,510,986 $118,026,656 $113,130,153
High Yield Fixed Income Portfolio ............. 12,433,301 1,205,330 -- --
Intermediate Duration Fixed Income Portfolio .. 23,023,323 36,797,439 22,747,051 22,556,861
Growth Portfolio .............................. 46,482,340 40,299,206 -- --
International Equity Portfolio ................ 115,023,721 92,278,196 -- --
Small Cap Equity Portfolio .................... 139,376,585 166,871,695 -- --
Value Portfolio ............................... 11,960,212 12,990,518 -- --
5. LEGAL AND REGULATORY MATTERS:
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an
affiliate of BISYS Fund Services Ohio, Inc. which provides various
services to the Portfolios as described in footnote 3, reached a
settlement with the Securities and Exchange Commission ("SEC") regarding
the SEC's investigation related to BISYS' past payment of certain
marketing and other expenses with respect to certain of its mutual fund
clients. Although BISYS has reached a settlement with the SEC, the
Portfolios' management is not aware that any determination has been made
as to how the BISYS settlement monies will be distributed. The SEC's
examination of BISYS' mutual fund clients and their advisers, including
HSBC, has not been completed. While the Portfolios' management is
currently unable to determine the impact, if any, of such matters on the
Portfolios or the Portfolios' financial statements, management does not
anticipate a material, adverse impact to the Portfolios or the Portfolios'
financial statements.
6. FEDERAL INCOME TAX INFORMATION:
As of October 31, 2006, the cost, gross unrealized appreciation and
gross unrealized depreciation on securities, for federal income tax
purposes, were as follows:
NET UNREALIZED
TAX UNREALIZED TAX UNREALIZED APPRECIATION
PORTFOLIO NAME TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- -------------- ------------ -------------- -------------- --------------
Core Plus Fixed Income Portfolio .............. $125,300,474 $ 1,085,114 $ (291,652) $ 793,462
High Yield Fixed Income Portfolio ............. 12,509,676 66,589 0 66,589
Intermediate Duration Fixed Income
Portfolio ................................... 21,771,631 143,186 (53,141) 90,045
Growth Portfolio .............................. 54,631,776 6,517,205 (1,028,799) 5,488,406
International Portfolio ....................... 252,905,339 79,099,774 (3,279,816) 75,819,958
Small Cap Equity Portfolio .................... 203,854,870 46,004,811 (6,051,177) 39,953,634
Value Portfolio ............................... 54,501,953 14,341,092 (1,447,238) 12,893,854
HSBC INVESTOR PORTFOLIOS 114
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
HSBC Investor Portfolios:
We have audited the accompanying statements of assets and liabilities of
HSBC Investor Core Plus Fixed Income Portfolio, HSBC Investor High Yield Fixed
Income Portfolio, HSBC Investor Intermediate Duration Fixed Income Portfolio,
HSBC Investor Growth Portfolio, HSBC Investor International Equity Portfolio,
HSBC Investor Small Cap Equity Portfolio and HSBC Investor Value Portfolio (the
Funds), including the schedules of portfolio investments, as of October 31,
2006, and the related statements of operations for the year or period then
ended, the changes in net assets for each period in the two-year period then
ended and the financial highlights for each period in the five-year period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2006, by correspondence with
the custodians and brokers; or other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2006, and the results of their operations for the year
or period then ended, the changes in their net assets for each period in the
two-year period then ended, and the financial highlights for each period in the
five-year period then ended, in conformity with U.S. generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
December 22, 2006
115 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on
purchases; redemption fees; and exchange fees; and (2) ongoing costs,
including management fees; distribution and/or shareholder servicing fees;
and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the HSBC
Investor Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from May 1, 2006
through October 31, 2006.
ACTUAL EXPENSES
The table below provides information about actual account values and
actual expenses. You may use the information below, together with the
amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the
number in the table under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Core Plus Fixed Income Portfolio $1,000.00 $1,046.30 $3.30 0.64%
High Yield Fixed Income Portfolio 1,000.00 1,026.10 9.50 1.86%
Intermediate Duration Fixed Income
Portfolio 1,000.00 1,043.70 4.02 0.78%
Growth Portfolio 1,000.00 992.70 3.47 0.69%
International Equity Portfolio 1,000.00 1,036.40 4.41 0.86%
Small Cap Equity Portfolio 1,000.00 987.40 4.61 0.92%
Value Portfolio 1,000.00 1,076.00 3.61 0.69%
- ----------
* Expenses are equal to the average account value times the Portfolio's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
HSBC INVESTOR PORTFOLIOS 116
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HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--OCTOBER 31, 2006 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account
values and hypothetical expenses based on each HSBC Investor Funds's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges (loads), redemption fees, or exchange fees.
Therefore, the table is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would
have been higher.
EXPENSE PAID ANNUALIZED
BEGINNING ENDING DURING EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE PERIOD* DURING PERIOD
5/1/06 10/31/06 5/1/06-10/31/06 5/1/06-10/31/06
------------- ------------- --------------- ---------------
Core Plus Fixed Income Portfolio $1,000.00 $1,021.98 $3.26 0.64%
High Yield Fixed Income Portfolio 1,000.00 1,015.83 9.45 1.86%
Intermediate Duration Fixed Income
Portfolio 1,000.00 1,021.27 3.97 0.78%
Growth Portfolio 1,000.00 1,021.73 3.52 0.69%
International Equity Portfolio 1,000.00 1,020.87 4.38 0.86%
Small Cap Equity Portfolio 1,000.00 1,020.57 4.69 0.92%
Value Portfolio 1,000.00 1,021.73 3.52 0.69%
- ----------
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
117 HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES (UNAUDITED)
The following table contains information regarding HSBC Investor Family of Funds
Board of Trustees. Asterisks indicate those Trustees who are "interested
persons," as defined in the Investment Company Act of 1940, as amended, of the
Funds. The Funds' Statement of Additional Information includes additional
information about the Trustees and is available by calling (888) 525-5757.
NUMBER OF
PORTFOLIOS
TERM OF OFFICE AND IN THE FUND
NAME, ADDRESS POSITION HELD LENGTH OF TIME PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN OTHER DIRECTORSHIPS
AND AGE WITH THE FUNDS SERVED WITH THE FUNDS DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Frederick C. Chen Emeritus Trustee Indefinite; Trustee Management Consultant, 38 None
P.O. Box 182845 from 1990 to June since 1988
Columbus, Ohio 43218 2005;
Age: 79 16 years
- ------------------------------------------------------------------------------------------------------------------------------------
Larry M. Robbins Trustee Indefinite; 19 years Director, Center for 38 None
P.O. Box 182845 Teaching and Learning,
Columbus, Ohio 43218 University of Pennsylvania
Age: 68
- ------------------------------------------------------------------------------------------------------------------------------------
Alan S. Parsow Trustee Indefinite; 19 years General Partner of Elkhorn 38 None
P.O. Box 182845 Partners, L.P., since 1989
Columbus, Ohio 43218
Age: 56
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Seely Trustee Indefinite; 19 years Private Investor; Finance 38 None
P.O. Box 182845 Chair of the Vermont
Columbus, Ohio 43218 Republican Party; President
Age: 61 of Investor Access
Corporation, 1981-2004
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas Robards Trustee Indefinite; 2 years Private Investor; Chief 38 Financial Federal
P.O. Box 182845 Financial Officer, American Corporation and
Columbus, Ohio 43218 Museum of Natural History Overseas
Age: 60 (2003 to 2004); Chief Shipholding
Financial Officer, Datek Group
Online Holding Corp. (2000
to 2002); Executive member
of Board of Directors,
Executive Vice President
and Chief Financial
Officer, Republic New York
Corporation (1976 to 1999)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Brealey Trustee Indefinite; 2 years Emeritus Professor, London 38 None
P.O. Box 182845 School of Business (2002
Columbus, Ohio 43218 to present); Deputy
Age: 70 Chairman, Balancing and
Settlement Code Panel
(September 2000 to present)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen J. Baker* Trustee Indefinite; 3 years Chief Executive Officer, 38 None
P.O. Box 182845 HSBC Investments (USA),
Columbus, Ohio 43218 Inc. (2003 to present);
Age: 50 Chief Executive Officer,
HSBC Asset Management
(Canada) Limited (1998 to
2003)
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS 118
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES (UNAUDITED) (CONTINUED)
The names of the Officers, their addresses, ages, position(s) held with each
Trust, and principal occupation(s) during the past five years are described in
the table below. Unless otherwise indicated, the address for each Officer is
3435 Stelzer Road, Columbus, Ohio 43219-3035.
TERM OF OFFICE AND
NAME, ADDRESS POSITION(S) HELD LENGTH OF TIME PRINCIPAL OCCUPATION(S)
AND AGE WITH THE FUNDS SERVED WITH THE FUNDS DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Richard A. Fabietti President Indefinite; March Senior Vice President, Head of Product Management,
3435 Stelzer Road 2004-Present HSBC Investments (USA) Inc., 1998-Present
Columbus, Ohio 43219
Age: 48
- ------------------------------------------------------------------------------------------------------------------------------------
Elba Vasquez Vice President Indefinite; 2006-Present Vice President of Product Administration, HSBC
452 Fifth Avenue Investments (USA) Inc. (2005 to present); Vice President
New York, NY 10018 of Client Services, BISYS Fund Services, Inc. (1996 to
Age: 45 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
Marc Schuman Secretary Indefinite; 2005-Present Senior Counsel of BISYS Fund Services, Inc., 2005-
90 Park Avenue Present; Senior Corporate Counsel of The BISYS Group,
10th Floor Inc. 2001-2005; Of Counsel to Morgan, Lewis & Bockius
New York, NY 10016 LLP (law firm) 2000-2001.
Age: 46
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Lawlor Assistant Secretary Indefinite; March Assistant Counsel of BISYS Fund Services, Inc. 2005-
100 Summer Street 2005-Present Present; Associate Counsel of IXIS Advisors Group 2003-
Suite 1500 2005; Staff Counsel Loomis, Sayles & Company, L.P.
Boston, MA 02110 2000-2003; Legal Product Manager, Scudder Kemper
Age: 37 Investments 1999-2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Troy Sheets * Treasurer Indefinite; 2004-Present Employee of BISYS Fund Services, Inc., 2002-Present;
3435 Stelzer Road Senior Manager, KPMG LLP, 1993-2002
Columbus, Ohio 43219
Age: 35
- ------------------------------------------------------------------------------------------------------------------------------------
Frederick J. Schmidt* Chief Compliance Expires 2006; 2004-Present Senior Vice President and Chief Compliance Officer, CCO
90 Park Avenue Officer Services of BISYS Fund Services, 2004-Present; President,
10th Floor FJS Associates, 2002-2004; Vice President, Credit
New York, NY 10016 Agricole Asset Mangement, U.S., 1987-2002
Age: 47
- ------------------------------------------------------------------------------------------------------------------------------------
* Messrs. Sheets and Schmidt also are officers of certain other investment
companies of which BISYS or an affiliate is the administrator.
119 HSBC INVESTOR FAMILY OF FUNDS
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to the portfolio securities is available
without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and
HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders
or on the Fund's website at www.investorfunds.us.hsbc.com and the Securities and
Exchange Commission's website at http://www.sec.gov. A copy of the Fund's voting
record for the most recent 12 month period ending June 30 is available at the
Security and Exchange Commission's website at http://www.sec.gov.
Schedules of Portfolio Investments for fiscal quarters ending January 31
and July 31 will be available no later than 60 days after each period end,
without charge, on the Fund's website at www.investorfunds.us.hsbc.com and on
the Securities and Exchange Commission's website at http://www.sec.gov.
An investment in a Fund is not a deposit of HSBC Bank USA, National
Association, and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
HSBC INVESTOR FAMILY OF FUNDS:
INVESTMENT ADVISER AND ADMINISTRATOR
HSBC Investments (USA) Inc.
452 Fifth Avenue
New York, NY 10018
SUB-ADVISERS
HSBC INVESTOR GROWTH PORTFOLIO
Waddell & Reed Investment Management Company
6300 Lamar Avenue
Overland Park, KS 66202
HSBC GROWTH AND INCOME FUND
TransAmerica Investment Management, LLC
1150 S. Olive Street, Suite 2700
Los Angeles, CA 90015
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
AllianceBernstein Investment Research and Management
1345 Avenue of the Americas, 39th Floor
New York, NY 10105
HSBC INVESTOR MID-CAP FUND
Munder Capital Management
Munder Capital Center
480 Pierce Street
Birmingham, MI 48009-6063
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
Westfield Capital Management, LLC
One Financial Center
Boston, MA 02111
HSBC INVESTOR VALUE PORTFOLIO
NWQ Investment Management Co., LLC
2049 Century Park East, 4th Floor
Los Angeles, CA 90067
SHAREHOLDER SERVICING AGENTS
FOR HSBC BANK USA, N.A. AND
HSBC BROKERAGE (USA) INC. CLIENTS
HSBC Bank USA, N.A.
452 Fifth Avenue
New York, NY 10018
1-888-525-5757
FOR ALL OTHER SHAREHOLDERS
HSBC Investor Funds
P.O. Box 182845
Columbus, OH 43218-2845
1-800-782-8183
TRANSFER AGENT,
DISTRIBUTOR AND SPONSOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIANS
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
HSBC INVESTOR GROWTH PORTFOLIO
HSBC INVESTOR GROWTH AND INCOME FUND
HSBC INVESTOR MID-CAP FUND
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
HSBC INVESTOR VALUE PORTFOLIO
HSBC Bank USA, N.A.
452 Fifth Avenue
New York, NY 10018
HSBC HIGH YIELD FIXED INCOME PORTFOLIO
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
Investors Bank & Trust Company
200 Clarendon Street - 16th Floor
Boston, MA 02116
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, OH 43215
LEGAL COUNSEL
Dechert LLP
1775 Eye Street, N.W.
Washington, D.C. 20006
The HSBC Investor Family of Funds are distributed by BISYS Fund Services. This
document must be preceded or accompanied by a current prospectus for the HSBC
Investor Funds, which you should read carefully before you invest or send money.
-- NOT FDIC INSURED -- NO BANK GUARANTEE -- MAY LOSE VALUE
HSB-0008 12/06
ITEM 2. CODE OF ETHICS.
(a) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER,
PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR
FUNCTIONS. THIS CODE OF ETHICS IS INCLUDED AS EXHIBIT 12(A)(I).
(B) DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE
REGISTRANT'S CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR
CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS; THERE HAVE BEEN NO
AMENDMENTS TO, NOR ANY WAIVERS GRANTED FROM, A PROVISION THAT RELATES TO
ANY ELEMENT OF THE CODE OF ETHICS DEFINITION ENUMERATED IN PARAGRAPH (B) OF
THIS ITEM 2.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
3(a)(1) THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT
HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT
COMMITTEE.
3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS THOMAS ROBARDS, WHO IS
"INDEPENDENT" FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES,
2005 $255,000
2006 $284,700
(b) AUDIT-RELATED FEES,
2005 $40,000
2006 $41,600
2005 - Fees of $5,000 relate to the consent of N1A filing and $35,000
relate to the performance of the Funds' 17f-2 examinations.
2006 - Fees of $5,200 relate to the consent of N1A filing and $36,400
relate to the performance of the Funds' 17f-2 examinations.
(c) TAX FEES,
2005 $139,200
2006 $154,800
Fees for both 2005 and 2006 relate to the preparation of federal income
and excise tax returns and the review of excise tax distributions.
(d) ALL OTHER FEES,
2005 $0
2006 $0
(e)(1) Except as permitted by Rule 2-01(c)(7)(i)(C) of Regulation S-X,
the Trust's Audit Committee must preapprove all audit and non-audit services by
the independent accountants relating to the operations or financial reporting of
the Funds. Prior to the commencement of any audit or non-audit services to a
fund, the Audit Committee reviews the services to determine whether they are
appropriate and permissible under applicable law.
(2) None of the services summarized in (b) - (d), above, were
approved by the audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation
S-X.
(f) Not applicable.
(g) Non-Audit Fees.
2005 $228,200
2006 $238,800
(h) THE AUDIT COMMITTEE CONSIDERED THE NONAUDIT SERVICES RENDERED TO
THE REGISTRANT'S INVESTMENT ADVISER AND ANY ENTITY CONTROLLING, CONTROLLED BY,
OR UNDER COMMON CONTROL WITH THE INVESTMENT ADVISER, AND BELIEVES THE SERVICES
ARE COMPATIBLE WITH THE PRINCIPAL ACCOUNTANT'S INDEPENDENCE.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a)THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
HAVE CONCLUDED, BASED ON THEIR EVALUATION OF THE REGISTRANT'S DISCLOSURE
CONTROLS AND PROCEDURES AS CONDUCTED WITHIN 90 DAYS OF THE FILING DATE OF THIS
REPORT, THAT THESE DISCLOSURE CONTROLS AND PROCEDURES ARE ADEQUATELY DESIGNED
AND ARE OPERATING EFFECTIVELY TO ENSURE THAT INFORMATION REQUIRED TO BE
DISCLOSED BY THE REGISTRANT ON FORM N-CSR IS RECORDED, PROCESSED, SUMMARIZED AND
REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND EXCHANGE
COMMISSION'S RULES AND FORMS.
(b)THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING THAT OCCURRED DURING THE SECOND FISCAL QUARTER OF THE PERIOD COVERED
BY THIS REPORT THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO
MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING.
ITEM 12. EXHIBITS.
(a)(1) THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM
2 IS ATTACHED HERETO.
(a)(2) CERTIFICATIONS PURSUANT TO RULE 30A-2(A) ARE ATTACHED HERETO.
(a)(3) NOT APPLICABLE.
(b) CERTIFICATIONS PURSUANT TO RULE 30A-2(B) ARE FURNISHED HEREWITH.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) HSBC ADVISOR FUNDS TRUST
By (Signature and Title)* /S/ RICHARD A. FABIETTI
-------------------------------------------------------
Richard A. Fabietti
President
Date_____January 5, 2007_______________________________
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ RICHARD A. FABIETTI
-------------------------------------------------------
Richard A. Fabietti
President
Date____January 5, 2007________________________________
By (Signature and Title)* /S/ TROY A. SHEETS
-------------------------------------------------------
Troy A. Sheets
Treasurer
Date_____January 5, 2007_______________________________
* Print the name and title of each signing officer under his or her signature.